Immigration, Jobs and Wages: Theory, Evidence and Opinion

In most countries of the industrialised world, migration is a highly sensitive political issue. Stories relating to migration appear regularly in the national media and often prove to be central points of debate in electoral campaigns. The causes and effects of migration also feature prominently in political debates in much of the developing world. For domestic residents, who remain unsure of its consequences, rising immigration can generate feelings of fear and anxiety. They suspect that waves of newcomers may reap the rewards of others’ hard work. Economists, in turn, have conducted extensive research in an attempt to establish whether such fears are justified. However, the perceived complexities of economic analysis have meant that the public debate has tended to ignore some simple and fundamental results. This report provides a brief historical overview of Europe’s migration experience since World War II, and presents a simple economic model that shows how immigration can affect the host countries’ economies. However, without supporting empirical analysis, economic theory is nothing more than pure speculation. It is this measurement of the effects of immigration that has proved to be a difficult task. Christian Dustmann and Albrecht Glitz explain the challenges researchers face when conducting empirical analysis. They discuss the advantages of different methodological approaches, and also the problems associated with each of them. The authors then provide a summary of the existing empirical literature and discuss the latest developments that have been made in this field of research. In the penultimate chapter the authors investigate how attitudes to immigration and its effects on wages, employment and wealth redistribution are related to individuals’ socio-economic characteristics. The chapter also analyses how differences in average perceptions across countries are related to macroeconomic indicators. The debate about the effects of immigration is an important one, and the issues involved are complex. A better informed debate may help supporting implementation of welfare-enhancing policies. This report is written for the non-specialized reader. It makes a significant contribution by extending and consolidating knowledge and understanding of the possible effects of rising migration flows.