How would you design an immigration system that served the national economic interest, but also commanded public support, if you could start from scratch?
The question is both topical and for some nations, pressing. Following America’s election of Donald Trump and the United Kingdom’s decision to quit the European Union, many policymakers are considering how best to respond to the backlash against a free market in border policies.
Britain, in particular, is having to respond to a majority’s desire to “take back control” of borders – while business worries about national prosperity if immigration is simply “shut down”. The Brexit negotiations seem likely to involve a clear trade-off between a willingness to retain “freedom to travel” for EU citizens and securing a “free trade” deal for British goods and services.
Any rational government needs to start off by recognising some of the huge benefits of immigration flows. Even the most pro-Brexit ministers have struggled to identify parts of the economy in which there is a clear case for stopping migrant labour. Whether it is top business people, health service staff, or seasonal agricultural workers, developed economies usually benefit significantly from foreign labour.
Large sections of the public in developed countries have nonetheless reacted badly to the recent scale of immigration – feeling that it represents a “loss of control”. It’s no wonder that immigration is particularly unpopular with less skilled and lower income groups. Some economic evidence1 suggests that they have most to lose from wage competition. While immigration is most beneficial for high and middle earners it can reduce living standards for the poorest citizens of “host” nations.