This article was written by upper-sixth former Anish Goel.
Estimated read time: 6 minutes
Since World War Two, countries have reduced trade barriers and have tended to move towards free trade. Should the world follow a similar path with respect to immigration and open all borders?
Most economists tend to agree with both the policies of free trade and free movement of people. To a free market economist, restricting immigration prevents the free market from allocating labour most efficiently. Free movement of people, in theory, should increase world GDP, with The Economist estimating that it could make the world $78 trillion richer. However, there are other important factors including the effect on the natives and the large cultural and social effects. The definition of ‘open borders’ also may vary, although it could, it does not necessarily mean we become a nationless world with no borders between country. Countries could maintain their borders and vet everyone who enters their country but would allow everyone in, except in extremely extenuating circumstances e.g. a security risk.
Open border immigration has the potential to lower the wages of native workers. Immigration increases the supply of available labourers so (ceteris paribus) one might expect wages to fall for native workers as they now have more competition in the labour market. This problem is exacerbated by the fact that migrants often take low-skilled work, e.g. in the UK in 2013 of the 13 million low-skilled jobs, 2.1 million were occupied by migrants. Low-skilled workers earn lower wages and so if their wages are lowered even more by immigration, it could lead to some not being able to afford the necessities e.g. food, utilities, rent etc and so would be an undesirable policy for governments to follow as a government’s job is to protect its own people first.
In reality however, immigrants don’t necessarily reduce native wages, especially in the long run.
Immigrants are also consumers and so will need to buy more products to sustain themselves. Therefore, increasing the demand for goods and services which increases the derived demand for labour to provide these products. This may then help to offset the reduction in native wages. The Mariel Boatlift case study illustrates the reality that the influx of immigrants may have little effect on native wages. In 1980 there was a sudden influx of Cuban immigrants into Miami, the size of the labour force increased by 7%. There seemed to be virtually no effect on the wages of natives, nor on the unemployment rate even for African American minority groups. Immigrant’s don’t necessarily
compete for the same jobs as natives, often companies rearrange their structure and delay their automation due to the available supply of immigrant workers. This allows native workers to move onto more complex roles with more technical ability and communication required. In the short term a certain minority of low-skilled workers may see wage reduction however overall, in the long term, wages will likely go up.
Open borders may make it possible for workers to commute from one country to another which could lead to native wages decreasing, especially in regions near the border. Commuting immigrants may spend their wages in their native country rather than the country in which they are working. So, the derived demand for labour will not increase. With the increased supply of labour from the commuting immigrants we could see a reduction in wages for natives. The native country may not feel the benefits of immigration if the ‘demand channel’ is shut down and the wages of the immigrants are repatriated. A similar effect could be seen if the immigrants send a significant amount of their earnings back home. So, for an open border policy to fully benefit the natives, some regulation would need to be enforced which restricts the ability of individuals to reside in one country and work in another.
Another potential problem associated with open border immigration is the existence of state welfare. As Friedman suggested, in a welfare state, “the supply of immigrants would be infinite”7. Taking the UK for example, the NHS is already under immense pressure and all immigrants can make full use of the service. Hitherto Britain’s departure from the EU, EU citizens were able to claim jobseekers allowance. Open borders could lead to a high number of immigrants immigrating to use these services and therefore reducing its quality for all. However, this problem is not as big as one would expect. Firstly, in the OECD European countries, it was found immigrants contribute more in social and tax contributions than they receive in individual benefits. Secondly, even if immigrants did take more than they give, if borders were opened, governments could write legislation limiting immigrants’ ability to gain free access to public services until they have worked in the country for some time.
The immigrants themselves have much to gain; that’s why they move. When they move to a new country, they move somewhere they can be more productive by making use of their new countries’ capital, efficient firms, stability, and strong legal system. They are therefore compensated more with a higher wage. Unskilled Nigerians can increase their earnings by 1000% by moving to the USA.11 Thus, opening borders has the potential to decrease global poverty and inequality more than foreign aid ever could; it would improve the immigrant’s standard of living.
By increasing their productivity, immigrants can also provide more value to their new country and the world. Michael Clemens claims that the complete opening of borders could double global GDP.
Shutting borders traps human talent in low productivity countries. Countries who receive immigrants increase the number of their factors of production and so increasing their potential output. Immigrants increase the proportion of the country, which is of working-age population, they bring new skills to a country and contribute to human capital development of receiving countries. Immigrants will provide more than the sum of their labour as they are enterprising and often start businesses and organise the factors of production. Through creating jobs and increasing GDP, migrants grow a nation’s economy.
Immigration has the potential to promote more gender equality amongst natives. Immigrants often enter jobs such as childcare, cleaning and catering and so the increased supply of these types of workers decreases their cost.15 In the UK 19% of cleaning jobs are taken up by immigrants. Domestic jobs like cleaning and childcare are often taken up by women as unpaid labour. By decreasing the cost of such services, they become more affordable for families and so they may free women up to join the workforce. The price of childcare may be reduced enough to make it worthwhile for a woman to get a job, and then pay for someone to help with childcare. This would allow women to have more fulfilling careers and when they join the workforce, they can take up more productive jobs and provide more benefit to society in terms of tangible economic value.
It could be argued that the influx of new culture has a positive effect on a country. Take the UK for example, whose curry houses in 2016, employed 100,000 people and had annual sales of £4.2 billion. This income and these jobs are a direct result of immigration from South Asia and the culture which followed. The cultural benefits of immigration are not limited to culinary choices. Immigrants are often hard-working, risk-takers and entrepreneurial. Out of the USA’s top 500 companies, 43% were founded or co-founded by immigrants or their children; immigrants bring a more innovating culture to a country and can make use of their ‘cross-cultural experiences’ to create better products.
There is also the notion that immigrants bring a culture of crime with them; however, the data does not necessarily support this, e.g. in the USA foreign-born residents are only a fifth as likely to be incarcerated. Some may also argue that open borders allow terrorists to enter the country, however, there is that risk with our current immigration system. Having open borders does not forfeit a countries right to vet those entering their borders. Additionally, due to the economic
growth that results from immigration, there is evidence to suggest that terrorist activity is reduced by immigration.
The biggest loser of immigration is probably the nation from which immigrants leave. If the risktaking and resilient citizens leave a country, that country is bound to suffer. A smaller population will cause decreases in GDP, and due to the nature of those leaving, it may see fewer businesses set up. In Haiti 85% of their educated youth leave and thus the average education of the Haitian population decreases. However, this problem can be limited. Firstly, open borders would allow individuals to make use of richer countries’ universities, if they study there, they may return to their country more educated and therefore more productive. Secondly, immigrants often send money back to their family, this extra money is therefore pumped back into the local economy. Thirdly, many immigrants return to their home country having gained valuable work experience abroad and perhaps a broader cultural outlook, e.g. 45% of Mexicans who immigrated to the US eventually return.23
Overall, I strongly believe borders should be opened far more than they already are, the potential economic value of immigrants living in low productivity countries is too great for countries to not take advantage of. Given current immigration levels, the sudden opening of borders could see too many people entering and countries could face overpopulation problems e.g. housing shortages. However, in the long run, I believe borders should eventually be opened up. Despite the fears of cultural clash and native culture getting ‘washed away’ and overwhelmed, many of these thoughts lay in racist and colonial attitudes; natives often vastly overestimate the presence of immigrants in their own country. Not only would immigration be beneficial economically, but in my opinion, it isn’t ethically right to restrict an individual’s standard of living based on the location of their birth, something of which they have no control over. In order to progress to an economically efficient world, where individuals’ talents are used to their potential, we must move towards opening our borders.
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