In the third part of our series about migration, we look at how immigrants can boost the local economy.
Immigration obviously benefits the people moving abroad, but it also offers advantages to the host country. Take the economy for example. While immigrants tend to send some of their hard- earned money home in the form of remittances, they spend it in shops and restaurants too. Here are another couple of ways they contribute to the overall growth of the local economy.
Expand the labour market
As we discussed in our last post, many people move overseas to improve their career prospects. Thanks to an effect known as the ‘immigration surplus’, they boost the host country’s economy at the same time. By expanding the workforce, immigrants increase the level of output which is one of the main drivers of economic growth.
Immigrants also help when there’s a shortage of workers in an industry, because native people can’t or won’t fill the positions. And as immigrants aren’t tied to a particular part of the host country, they’re free to move so they can take up jobs wherever the need is greatest.
Another way immigrants help is by rebalancing demographics. For example, if a country has an ageing population, it needs younger people to join the workforce and support the economy as the older generation retires.
Introducing new skills
In some cases, immigrants bring with them skills that may be missing from the local economy. This powers innovation which is a key driver of growth. The United States has hugely benefited from this effect. According to research published by the National Foundation for American Policy in 2016, over half of US startups valued at $1 billion and above were founded by at least one immigrant. What’s more, immigrants are important members of management and product teams at 70% of these startups, filling positions like Chief Technology Officer or Vice President of Engineering1. Some of the biggest companies in the tech industry were partly founded by immigrants- Google cofounder Sergey Brin was born in Moscow before emigrating to the US at the age of six.
A significant impact
To put the positive contribution of immigrants into perspective, let’s stick with the US as a case study. According to a report by the National Academy of Sciences called ‘The Economic and Fiscal Consequences of Immigration’, immigrants contributed $2 trillion to the US economy in 20162. That benefits everyone who lives in the US, both those who were born there and those who arrived from other countries.
Keep an eye out for our last post in this series, where we’ll look at the questions you should ask yourself before moving abroad.