Migration could be key for global economy to recover: IMF

Immigrants in advanced economies increase output and productivity both in the short and medium term

  
Mexican immigrants cast shadows on a National Institute of Migration (INM) building after they were deported from the United States and crossed the Paso del Norte border bridge amid the spread of the coronavirus disease (COVID-19), in Ciudad Juarez, Mexico April 21, 2020.

Mexican immigrants cast shadows on a National Institute of Migration (INM) building after they were deported from the United States and crossed the Paso del Norte border bridge amid the spread of the coronavirus disease (COVID-19), in Ciudad Juarez, Mexico April 21, 2020.

Reuters/Jose Luis Gonzalez

The IMF's most recent 'World Economic Outlook' report, set to be released on June 24th, states that migration improves economic growth and productivity in host countries. Supporting migrants now and ensuring migration trends continue beyond the pandemic will help the global economy recover, according to economists from the global monetary organisation.

Immigrants in advanced economies increase output and productivity both in the short and medium term, the IMF said. "While the Great Lockdown is temporary, the pandemic may add to a general sentiment of reticence and disbelief in openness and have longer term effects on countries’ willingness to receive migrants," the report stated.

Migration flows

In 2019, 270 million people in the world were migrants. The migrant population has increased by 120 million since 1990. However, the share of migrants in the world’s population has hovered around 3 percent over the past 60 years.

“Strikingly, the share of immigrants in the total population of advanced economies has risen from 7 percent to 12 percent, while the share of immigrants in emerging market and developing economies has remained at around 2 percent,” IMF said.

Migrants often settle within their home region. However, a significant part of international migration takes place over long distances (for example, from South Asia to the Middle East) and, in particular, from emerging market and developing economies toward advanced economies.

A major reason why people migrate is income differences between origin and destination countries. Richer countries attract more immigrants, especially from countries with younger populations. Countries with lower per capita income experience more emigration, but only if they are not too poor.

According to the IMF, when per capita income at the origin is below $7000, countries with lower incomes have lower emigration toward advanced economies. This suggests that people get trapped in poverty since they are deprived of the resources needed to overcome migration costs.

Economic Impact

Immigrants in advanced economies increase output and productivity both in the short and medium term.

"Specifically, we show that a 1 percentage point increase in the inflow of immigrants relative to total employment increases output by almost one percent by the fifth year," IMF said, adding, "That’s because native and immigrant workers bring to the labor market a diverse set of skills, which complement each other and increase productivity. Even modest productivity increases from immigration benefits the average income of natives."

But for the various benefits migration brings in, there are challenges too.

Migration may also create distributional challenges, as native workers in specific market segments could be hurt economically, at least temporarily. Fiscal and labor market policies should therefore be used to support the income and retraining of those natives facing labor market difficulties, IMF noted.

According to the IMF, streamlined labour policies and language training could raise the economic gains from migration.

"Active labor market and immigration policies geared toward integrating immigrants, such as language training and easier validation of professional titles, can help build even better outcomes from immigration in recipient countries," it said.

(Writing by Seban Scaria, editing by Daniel Luiz)

seban.scaria@refinitiv.com

#MIGRATION #GLOBALECONOMY #IMF

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