Immigration accelerates developed economies and decelerates developing economies
According to a December 2023 study by IMF experts[1], Spain experienced a wave of emigration[2] starting in the early 2000s, which increased the share of the non-Spanish-born population from about 2 percent to 2000 to 12 percent in 2011. This occurred at a time of an economic boom (especially real estate) and record low unemployment.
While, according to The Economic, 1.2 million people moved to Britain last year – almost certainly the biggest ever. Net migration (i.e. emigrants minus emigrants) to Australia is double the pre-Covid-19 rate. Spain’s equivalent figure recently hit an all-time high. Nearly 1.4 million people are expected to move to America this year. In 2022, net migration to Canada was more than double the previous record, and to Germany it was even higher than during the “migration crisis” of 2015.
So it is clearly seen that developing and poor countries are the main “suppliers” of immigrants worldwide, influencing the economies of developed countries with the increased supply of work and knowledge they possess.
Has immigration affected economic growth, or is immigration merely driven by improved economic prospects in the short term without furthering its effect?
Since emigration is often in search of better economic opportunities (Grogger and Hanson, 2011), the prospects for a country’s economic growth are strong incentives to attract migrants, rather than a consequence of emigration. According to the conclusions of the IMF expert study on the case of Spain, it is found that the results for the impact of immigration in OECD countries are fully consistent with the “optimistic” view according to Ortega and Peri (2009), that immigration does not have negative consequences in internal employment, thanks to the rapid and vigorous positive response of investments. In fact, the findings are even more optimistic, as they find positive and significant effects of large waves of immigration in OECD countries. These effects materialize very quickly and are consistent with those found in long-term studies of the effects of emigration. “Dynamic gains” from immigration, in the form of increased productivity and investment, can be interpreted as evidence of matching and filling gaps between the skills of immigrants and the native-born population.
However, refugee immigrants or those who cross the borders of developed countries illegally are at a disadvantage compared to other types of immigrants. The conditions under which refugees immigrate and the limited opportunities they have to participate in the labor market in host countries significantly reduce their opportunities to contribute to the economy where they work.
But while the economic benefit to the host countries of immigrants has become known, what we want to continue to analyze is the impact on the economies of their countries of origin and the tasks that governments in these countries have to do.
Focusing on the economic impact in Albania, most of the analysis and data focuses on the effect of the removal of the labor force from the internal market, where it also affects the public finances with its absence. On the one hand, young people who are the dynamic part fail to increase the workforce and help support public finances with contributions and taxes. On the other hand, all this age is also the main influencer in the aging of the population in the Albanian economy, which is facing a phenomenon that has no experience in treatment and has not yet put it in the right focus to manage it for the future.
A main reason if you look at the level of unemployment among young people in Albania is the integration into the labor market[3] twice less than the average labor force can, being displaced from the market as a reason for the lack of appropriate skills that the market requires , but also because the market offers jobs that do not coincide with their requirements and ambitions for the future.
This situation can add pressure on household budgets and the labor market, as well as security systems and can even create social tensions.
But little is known about the long-term impact of immigration on the GDP per capita (or standard of living) of the economy. Immigration can affect GDP per capita in two ways.
First, it may reduce the share of working-age people in the total population, because the immigrants who tend to leave are mostly of working age. This effect is the biggest[4], since the departure of this labor force creates cracks in the labor market. In the last two years, the net migration[5] is – 32.5 thousand individuals. This growing gap in the market cannot be filled by recruiting employees from other countries[6] (mainly from neighboring countries, Turkey and the Middle East and Asia)[7].
Second, this growing gap in the amount of labor contains the strong problem for now, but more so for the future, of the impact on productivity per worker. So, the strong and direct effect is the reduction of the added value of the Albanian economy and with it the competitiveness to enter the markets and to maintain and strengthen the export. The strongest internal migration in Albania is in Dibër, Berat, Elbasan, Fier and Korçë[8]. In these regions of the country, the agricultural sector holds the main place with over 43% in Korça to close to 49% in Berat. The departure of the labor force from these regions is seen to be directly related to the lack of suitable jobs for a high value, but also to a perspective that is not optimistic, as long as agriculture dominates up to half of the economy and other sectors are still far expectations to create high work value. This economic situation has had the effect of encouraging highly educated immigrants due to the benefits associated with their high productivity that they can only find in foreign labor markets starting from Europe and continuing with other OECD countries. of. But even immigrants with low and medium skills can potentially also contribute to the aggregate productivity of the countries bordering Albania, justifying that their skills are complementary to those of the natives in the countries where they immigrate.
Based on these statistical facts that we present here, we raise the concern regarding the benefits from work and consumption of immigrants who leave the country, where beyond the effects as above it seems that their contribution there increases the weight of the economy through consumption and work and reduces it in size smaller in Albania (due to their partial engagement in the labor market, and contribution only as consumers of products and services). Meanwhile, the contribution from remittances mainly from immigrants, which on average are at an annual level of 5.5% of the GDP, is the second effect that goes to the increase in the consumption of the Albanian economy, but without a visible impact on the production sectors and on the growth of productivity.
But the most important impact they give for the future is the rapid impact on the aging of the population and the creation of an increasing social pressure on the state budget, as well as on the standard of living of the third age.
Our estimates of a significant impact of immigration on GDP per capita suggest that the erosion (loss) of fiscal revenue from immigration may be greater than might be estimated, based on static estimates of net fiscal gains ( the difference between the taxes and social security contributions of residents who have emigrated with their receipt of social security benefits and state services (education, health, etc.) for the years they have been resident in Albania.
Meanwhile, the reintegration of immigrants into the labor market is critical, both when prompted by government invitations to come as investors or as a workforce, as well as when these decisions come from the internal motives of immigrants. The reality they feel at the moment of return is stronger than the rest that influenced their decision and they are back at the starting point, but with less energy to make a living and benefit from the redistribution of GDP. per capita for citizens. It is a fact that the income per capita has increased a little[9], but in the last countries in Europe, just like decades before[10]. This level of income, which shows little income from labor and capital, is a strong reason, which always affects the long-term decision to immigrate again or for new emigrations.
A series of policies that were undertaken in the last decade to help a part of the labor market through vocational education are seen to have had little impact and with an insensitive weight to prevent young people in their decision to emigrate[11]. The lack of appropriate skills for the market and the inconsistency of young people’s requirements with the labor market offer creates premises for reducing the added economic value in the country, as well as it is comparable to the impact on the inhibition of economic growth, for vital sectors of value high, such as: production based on technology, production with standards for high-value markets and the creation of a tradition of productive work for the circulation chain of the economy and jobs.
If education together with the creation of an aggressive approach to increase investments in research and development, as well as by better harmonizing the positive parts of the economic chains with new technology approaches to move to a new economic transition with few risks will it had every chance to be acceptable to the entire group of highly qualified candidates to emigrate, and it would begin to close the gaps in the reasons for emigration, restoring the balances in the market and society.
So mitigation policies can help adjust a new balance in a positive direction. In addition to measures to promote the integration of young people in the labor market, measures related to young people are also integrated policies for young families and overall stimulation of their strengthening. If the still very harmful approach of designing strategies to show a virtual reality and not at all helpful in addressing problems is followed, then all this great damage should be calculated to be billed as economic damage instead of damage. moral as until today.
[1] https://www.imf.org/-/media/Files/Publications/WP/2023/English/wpiea2023259-print-pdf.ashx
[2] the process of people moving to a place to live and work there
[3] https://www.instat.gov.al/al/temat/tregu-i-pun%C3%ABs-dhe-arsimi/pun%C3%ABsimi-dhe-papun%C3%ABsia/publikimet/2022/anketa-tremujore-e-forcave-t%C3%AB-pun%C3%ABs-t4-2022/
https://www.instat.gov.al/media/12843/atfp-tr3-2023_press-release.pdf
[4] the median population in 2023 was 38.8 years old, up from 38.2 years old in 2022
[5] the difference between immigrants (those entering) and emigrants (those leaving)
[6] https://www.instat.gov.al/media/11653/popullsia-e-shqiperise-1-janar-2023.pdf
[7] https://www.instat.gov.al/media/12600/draft-publikimi-i-te-huajve-2022-2023.pdf
[8] https://www.instat.gov.al/media/12879/vjetari-statistikor-rajonal-2023.pdf
[9] https://altax.al/en/income-per-capita-in-albania-and-exchange-rate-2002-2022/
[10] https://www.monitor.al/shqiperia-e-parafundit-ne-europe-per-te-ardhurat-per-fryme-pa-rritje-ne-2012/
[11] https://www.balkanweb.com/arsimi-profesional-kryeministri-rama-tregu-i-punes-i-etur-per-profesioniste-pagat-po-vazhdojne-te-rriten-ndjeshem/#gsc.tab=0
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