What You May Not Know About Immigration

The quest for prosperous settlements is an ancient phenomenon. Even before we came to exist as humans, animals would instinctively explore different areas of the globe looking for a better way of life. Immigration is in our nature and is part of human evolution. Yet, every time we read about this on the news it is presented as a novel crisis. The reason for that might be that immigration is often associated with competition in the labour market, which workers are blindly allergic to. But from a broader perspective, it may actually be extremely beneficial for the society as a whole. To understand why, we need to look into some economic concepts.

To compare the quality of life across countries or over time, we use the notion of standard of living, which is basically the ratio of the GDP over population at a given time, i.e. GDP per capita. In its turn, GDP is a measure of all goods and services produced in a period. It happens that this production is made by people using material and immaterial means of production, like physical facilities, technology and skills. In summary, the wealth of a country is made by the people that live in there.

In that sense, there are many ways in which the lack of productive people affects substantially the quality of life of a country`s inhabitants. For instance, the half-century long process of population ageing in developed countries means that there are more people retiring and less people joining the labor market every year. More remarkably, a country may experience a shortage of specialized workers that could be either quickly ease by immigration or attemptedly tackled through education. Although education per se is an excellent investment for a country, it may not be the best answer for specific problems.

Take the example of the construction sector in the UK. Most people know that house prices have been on a rise for several years due to a persistent undersupply of dwellings. But what few people know is that there is currently an even larger shortage of construction workforce. According to the article "Can we fix it? No we can`t" (The Economist, Aug 15th 2015), the UK Commission for Employment and Skills reports that while some 700,000 new recruits are predicted to be needed in the next ten years to face the increasing demand, only 20,000 fresh trainees were attracted by the sector in 2013, half of the number reported in 2005.

In general, countries not open to immigration tend to experience a rather adverse cycle of alternating demand and supply of skills. The reason for that is simple. When a specific career is booming and lacking professionals it attracts many young students who, by the time of their graduation, find themselves competing with a much larger cohort than expected.

So, the answer for whether immigrants foster or halt prosperity must not reside in the cloudy realm of prejudice and vague statements. Economics, on the other hand, provides the proper tools to understand and evaluate the relevance of immigration to a country. Such that in place of Ronald Reagan famous quote “A nation that cannot control its borders is not a nation,” an economist would say: "A nation that cannot supply workers for its business is not a nation."