# **Box 1: Global gains from migration**

Even though quantitative estimates of the direct gains from migration are difficult to obtain, economic simulations suggest that an increase in South-North migration would produce substantial income gains in the long-run; these income gains could exceed those from comprehensive trade liberalization; and the destination countries in the North would capture one fifth the overall benefits of increased immigration (World Bank 2006, Winters _et al._ 2003, Anderson & Winters 2008, van der Mensbrugghe & Roland-Holst 2009). Documented welfare gains from South-North migration work primarily though the increase in the available labor force. Ortega and Peri (2009) found that immigration increases employment in the destination countries in the North one for one, implying no crowdingout of natives. This result implies that immigration increases the total GDP of the receiving country without affecting average wages or labor productivity.

Immigration has also been observed to boost productivity through innovation and specialization. Data from the United States show that one percent increase in the share of migrant university graduates increase the number of patent applications and grants issued per capita (Chellaraj _et al._ 2008, Hunt & Gauthier-Loiselle 2008). However, burdensome regulatory requirements and procedures that foreign doctors, engineers, architects and accountants have to meet in order to practice in the destination country can impose significant financial and other costs on these highly skilled immigrants (Mattoo and Mishra 2009). Also the less-educated immigrants increase labor productivity as they complement the uneducated local labor force that, based on their knowledge of the local language and institutions, will be better able to specialize in more productive complementary tasks (Peri & Spaber 2009). Furthermore, immigrants are often willing to do jobs that locals no longer are interested in, such as care for the elderly (UNDP 2009, p. 85). Also, the availability of low-cost childcare by the immigrants can enable young local women to go back to work (Kremer & Watt 2006) thus boosting economic development further.

Incoming migrants need to be integrated into the labor force, which intensifies the competition for existing jobs. Especially in times of economic downturn, the general public and the policymakers tend to become more worried about the potential adverse impact of immigration on natives’ opportunities, and immigrants can be used as scapegoats to blame for rising unemployment even though no strong evidence exists to show that immigrants take natives’ jobs (Papademetriou _et al._ 2009).<sup>14</sup> A common worry is also a downward pressure on salaries caused by an influx of migrant workers. Still, in the OECD countries the aggregate effect of immigration on wages has been found to be very small both in the short run and in the long run (Longhi _et al._ 2005), and similar

> 14 In Italy, government statistics agency publicly blamed immigration for the country’s rising unemployment in 2008, while rising unemployment in Spain led the government to launch a program where unemployed immigrants were paid to return to their home countries – in the first few months of the scheme less than 1,400 out of 100,000 eligible immigrants signed up. (Papademetriou _et al._ 2009)

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