At a Bonn joint lunchtime meeting with the Anglo-German Foundation for the Study of Industrial Society on 4 November at the Deutscher Industrie- und Handelstag, Klaus F Zimmermann argued that Germany can benefit from continued immigration. Zimmermann is Co-Director of the Centre's Human Resources programme and Director of the Seminar for Labor and Population Economics and the Archive of Applied Economics, and Dean of the Faculty of Economics at the Universität München. The views expressed by Professor Zimmermann were his own, however, not those of the Anglo-German Foundation nor of CEPR, which takes no institutional policy positions.

Zimmermann abstracted from issues of refugees and asylum seekers and focused on economic migration, which he maintained may play a major role in containing labour costs and improving Germany's international competitiveness. The liberalization of EC labour markets and growing demands for economic and political integration from the countries of Central Europe have brought migration to the top of the policy agenda. Pressures for increased migration will also rise as the West European countries' populations decline while those of their Eastern neighbours rise in the coming decades. Population growth and environmental disasters will bring similar demographic pressures from African countries.

West European public opinion is generally hostile to further migration on account of high and persistent unemployment and widespread fears that economic growth will no longer lead to increased employment. Various studies reveal, however, that migration's dampening effects on wage growth are much smaller than is commonly supposed and affect only limited sectors of the economy. In West Germany during 1984-9, for example, a percentage point increase in the overall share of foreign labour implied a reduction of DM 0.70 or 4.1% in the average hourly wage of DM 17.70, while the share of foreign labour has had only a marginal effect on the level of German unemployment. Immigration also brings the important but less visible benefits of higher economic growth and improved international competitiveness by relieving pressures in labour markets; it may also bring net gains to social security systems.

Zimmermann argued that Germany should adopt a selective immigration policy, attuned to the needs of its labour market. This has proved successful in Canada, where the introduction of a point system based on labour market criteria has enabled the government to attain its target levels of education and occupation skills for immigrants. Such a policy may raise growth and overall welfare, since skilled labour is scarce in Germany but available in abundance in Eastern Europe. Economic migrants are usually motivated and mobile, so their entry into German labour markets may help to moderate the excessive growth of labour costs and thus maintain international competitiveness. Immigration may also boost the demand for goods and help to moderate excess demand for labour in specific sectors or regions.

Zimmermann argued that alternative policies to reduce the supply of potential migrants, such as investment in or liberalizing trade with the sending countries, will act too slowly to be effective. Policies to reduce Western Europe's demand for migrants, for example through investment in native human capital or new technologies to offset the decline in available labour in the near future, will also take effect only in the very long run. Policy-makers must also decide whether to aim at temporary or permanent immigration at assimilation or multiculturalism. Historical experience suggests that assimilation policies have generally failed: the US `melting pot' is largely a myth, while Australia abandoned its explicitly assimilationist policy in the 1970s in favour of multiculturalism.

Finally, Zimmermann noted that Germany should insist on a common European migration policy. With increased integration of EC labour markets, national immigration laws are of only limited effect: if any country allows extensive immigration, for example, its natives may easily migrate to other member countries. Such a common policy should also share the burden of non-economic migration equitably, and it must also consider whether member states should `specialize' in migration from different world regions, as the current structure of their migrant stocks suggests.