In “What Effect Will Migration Have on European Wages?” I take up the economics of the migration crisis that recently moved above-the-fold. Discussions of the humanitarian crisis are invariably followed by the economic question: how will such an influx of migrants affect the wages and job prospects of European workers?
There is broad agreement among economists that immigration is good for nations. Immigrants create new demand for goods and services, and their willingness to accept low wages reduces prices. There are clear gains from immigration that are broadly distributed. But the losses are concentrated, felt mostly by certain subsets of incumbent workers who face a more competitive labor market and downward pressure on wages. Though the resulting economic growth will benefit them in the long run, the initial effect on these workers is negative.
During the Great Migration in America, roughly seven million southern-born Blacks moved to the industrialized North between 1910 and 1970. Recent research suggests that though this was great for the northern economy and the workers who moved there, it hurt incumbent northern black workers, whose wages were depressed by seven percent due to the influx of southern labor.
In the long-run, the Great Migration was an indisputable benefit for the American economy, just as the recent wave of migrants will be to Europe. But just as there were winners and losers in the North, there will be winners and losers in the European countries who open their borders to refugees.