Long run and short-run effects of immigration to the host country

Introduction

The most controversial aspect of immigration policy is the extent to which the arrival of immigrant impacts the native workers who compete with the immigrants. Immigration of unskilled workers has both long run and short-run effects on the employment, wage, and economy of a country. The paper has presented the short run effects in terms of impacts on the distribution income as well as the long run effects in terms of increased labor supply that enhance the economic growth of the host country.

Short run effects

Immigration of unskilled labor on the short run creates greater unemployment and inactivity of the unskilled labor in the host country. Records of immigration have shown that unskilled immigrant workers have led to high unemployment of the unskilled native workers as well as reduced wages (Foged and Peri, 2016). Thus it is evident that immigration of unskilled workers has affected the distribution income through composition impacts of the labor markets in the short run leading to changes that have affected the incomes of the natives.

To understand this, immigration has changed the level of income inequality where the different immigrants with low skilled have led to the different dispersion of wages from the natives (Constant, 2014). Relatively, in the short run, a lot of funds are used to get professionals to teach this new team of immigrants to learn all they need to know about the company and their part of the job. Since learning requires patience, time is lost and this tends to affect the countries income greatly. Most immigrants are also less educated and some don’t even know the language of the country they have gone to which also needs to be taught to them

A country’s economy is based on the laborers that they have. Native laborers are not always enough and hence immigration of laborers policy was implemented in most countries. The problem, however, comes when the laborers are unskilled. In this case, they all have to undergo training and obtain skills to be effective in the country’s economy. It is evident that the low skilled immigrants have been the cause of stagnant wages within the host country as well as a cause of unemployment in the advanced economies. These have contributed to increased impacts on income distribution or wages for the native workers who feel that the immigrants are accepting low pay for the same amount of work or increased hours in the labor force.  For instance, it has been identified that two-thirds of the Mexican immigrants have been school dropouts who accept to offer to work under low wages and increased working hours. These have competed in the entry of jobs with unskilled native workers who offer low wage services thus leading to unemployment which has also contributed to reduced income distribution for the native workers.

Any changes in the wages have been influenced by unemployment and the influx of unskilled immigrants within a closed economy (Peri 2017). Ideally, the changes in the distribution of income in any economy will be influenced by the changes in the number of working hours and changes in the employment of unskilled native workers. Ideally, the fact that the immigrants offer cheap labor to the country, there is a tendency that they will rely on the immigrant’s cheap labor to lower their labor cost. This will lead to the native workers being laid off and terminated, Relatively, the natives will leave them to reduce their working hours and labor force.

Predicted unemployment due to the unskilled immigrants for the native workers will lead impact the wages and income between the different production sectors (Dadush, 2014). For instance, the American workers have preferred the cheap labor from the immigrants who are cheaply shipped from Turkey and China have made the farmers more competitive due to reducing labor cost and increased labor supply. On the other hand, the native workers in the farms have ceased working on the farms due to competition from minimum wage immigrants who are still working in the farms. Surviving farms are now realizing that cheap labor from the immigrants has enabled them to reduce the labor costs thus utilizing the immigrants. Thus, the unskilled native labor force will remain unemployed leading to income inequality due to the changes and existence of a large number of unskilled immigrant population.

Long run effects

In the long run, all the short run effects become minimal and the economy of the host country adjusts due to the fact that the unskilled immigrants and their offspring benefit the host country in building the social and human capital (Dustmann, Schönberg and Stuhler, 2017). For instance, in countries such as Canada and U.S, the children of the immigrants, as well as their employment market results, are comparatively not the same than those of the native offspring.

The effect of skilled and unskilled migration is examined in terms of labor supply and their impacts on the growth of the economy.  As a matter of fact, immigration creates investment opportunities and can affect total factor productivity in host republics in various ways, such as improving entrepreneurship and elasticity (Dadush, 2014). This is because, with more workers that have now gained the efficient skills needed to work, the levels of productivity tend to shoot.

Immigrants boost the economic growth of the country through increased labor supply and increased working hours.  More unskilled immigrants mean increased working hours for the economy (Peri, 2016). As a matter of fact, the large numbers of immigrants working in the host country equates to paying of taxes that boost the economic development of the host country. For instance, increasing immigration in the United States would mean increasing the efficiency of their companies in terms of labor pools. Immigration of unskilled labor would also help the companies to lower the cost of hiring labor that is more affordable

Conclusion

Generally, the short run effects of unskilled immigrants in the labor force affect the employment and wage of native workers thus leading to income inequality. On the other hand, the long run effects of unskilled immigrant workers mean that more immigrants constitute to more hours worked in the economy and increased labor supply which boost the per capita income thus leading to economic growth. Thus, large numbers of unskilled immigrants have both short run and long run effects to the host country.

References

Constant, A. F. (2014). Do migrants take the jobs of native workers?. IZA World of Labor.

Dadush, U. (2014). The effect of low-skilled labor migration on the host economy. World Bank KNOMAD Working Paper Series, 1.

Dustmann, C., Schönberg, U., & Stuhler, J. (2017). Labor supply shocks, native wages, and the adjustment of local employment. The Quarterly Journal of Economics, 132(1), 435-483.

Foged, M., & Peri, G. (2016). Immigrants’ effect on native workers: New analysis on longitudinal data. American Economic Journal: Applied Economics, 8(2), 1-34.

Peri, G. (2016). Immigrants, productivity, and labor markets. Journal of Economic Perspectives, 30(4), 3-30.

Peri, G. (2017). The impact of immigration on the wages of unskilled workers. Cato J., 37, 449.