Immigration to the land of redistribution

<p><em>Romesh Vaitilingam interviews Tito Boeri for Vox<br />
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June 2009<br />
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Transcription of an VoxEU audio interview [http://www.voxeu.org/index.php?q=node/3758</em></p>
<p><strong>Romesh Vaitilingam</strong>: Welcome to Vox Talks, a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam, and today's interview is with Tito Boeri of Bocconi University in Milan.<br />
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Tito and I met in London in June 2009 at a conference organized by the Center for Economic Performance. Tito had presented a paper entitled, &quot;Immigration to the Land of Redistribution.&quot; I began by asking him to explain the scale of migration to Europe in recent years.<br />
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<strong>Tito Boeri</strong>: Europe has been experiencing very large migration inflows in the last 20 years. Before, it was the US, the main land of attraction of immigrants. In the last 20 years, it has been the EU. We got about 26 million people from outside the EU.<br />
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And this has gone hand-in-hand, especially in the most recent years, with a deterioration of perception about migrants. If you look at several polls, and in particular, I've been working on the European Social Survey, which I think is a very good survey, you do see that Europeans seem to be more and more concerned about migrants.<br />
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They do think that the overall impact of migration on the economy is bad. And specifically, also, they do start off thinking that on specific grounds that there are serious problems related to migration. In particular, now that we are into the recession, you do see that there is also a very sharp deterioration of perception. And people do argue that they would like unemployed migrants to leave their country and go back to their country of origin. We have never seen something like that, to that scale, in Europe.<br />
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And I think that this type of perception can also explain things that we have been observing recently. For instance, the outcomes of European elections. Typically, social-democratic parties, during the recession, perform better in elections. And if you also look at the history of the European Parliament, you will see that in Strasburg, really, the best time, the golden ages of the social democrats, were just after a recession, or in the midst of a recession, like in '93, '94. This is because social democrats are deemed to be credible in pushing redistributive policies and being very careful about job losses and the social cost of recessions.<br />
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Now, I think, European citizens are realizing that the welfare-state expansion is not a really suitable way to counteract recession, because one of the side effects of this redistributive policy is to attract a lot of migrants. So, at the end of the day, it may be the migrants who will exploit these benefits, and may actually become, also, a heavy fiscal burden for the united citizens. And in terms of migration, certainly, the other field, the centre-right is more credible than the centre-left.<br />
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<strong>Romesh</strong>: So, really, you see this as a kind of paradox. You think of the European Union as pretty much taking the view, believing in social protection, believing in social inclusion. And yet the popular attitude has now turned to one of social exclusion, saying &lsquo;good-bye&rsquo; to people who've come here.<br />
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<strong>Tito</strong>: Indeed. The paradox is that these measuress were introduced as a measure of social inclusion, and they are becoming, right now, sort of weapons of mass exclusion. So something has to be done to deal with that.<br />
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I tried, clearly, in the paper, to document what has been happening, and the fact that, really, this perception of a fiscal burden is the driving force of the deterioration of perception, and I do think that I found some quite strong evidence of that. So it is because of this fiscal burden perception that Europeans are really thinking that migrants are a bad thing for Europe.<br />
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So I guess that, in terms of a response to this type of situation, the issue is to decouple migration from welfare. That's really the challenge.<br />
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So far, governments have been doing two things. One has been to tighten up migration policies by becoming more and more effective. And the second thing that they did, in some countries, was to reduce welfare access by migrants, in particular by restricting access to this measure only to citizens.<br />
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I don't think that these two measures, besides all the problems that we can talk about &ndash;equity, problems of assimilation &ndash; are enforceable. The very fact that you get so many legal migrants suggests that migration restrictions are not particularly effective.<br />
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And also, Europe's experience in the '90s, in cutting welfare access by migrants, suggests that, typically, these types of measurs have been challenged by courts, and you have an already large immigrant population of potential voters in our communities, and they would certainly oppose that. And thirdly, those who are supposed to implement these restrictions, social workers, are often very much against creating this type of asymmetry. So I don't think, really, this type of solution is a solution to decouple.<br />
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There are other ways to deal with the problem. One is to become more selective in migration policies, to adopt a point-based system, really, providing scores based on the education level. And clearly, that would allow migration composition to be less at risk of becoming people long-term dependent on social welfare.<br />
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Another option is to harmonize social welfare systems across the EU, because I do think that the European citizens do worry that if they have a general welfare state they would end up attracting only low-skill types, likely to become unemployed. And there is some evidence that this is indeed occurring.<br />
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And the third option would instead be to strengthen the contributory component of our social redistributive systems and make them more proactive, so to discourage people from becoming long-term dependent on welfare, in particular migrants.<br />
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The first two options, a point-based system and a common, or a EU-harmonized social welfare system, seem to me to be quite far from the current situation of the EU. We really like policy coordination, and I don't think that an agreement can be reached, at least in the short term. But certainly, these two options are to be considered, perhaps in the long term.<br />
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What is possible in the very short term is to really work out the national dimensions of social welfare systems and make them more proactive and increase the contributory component welfare system. There are many experiments going on in Europe on these things, and they are generally encouraging as to the fact that well-done, well-designed social policies do work pretty well, if there is clearly a good interaction between a benefit and sanction.<br />
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So if you give to people, help, assistance, but at the same time, you require from them cooperation, and in case they don't cooperate, you also have some sanction. This type of thing seems to work pretty well.<br />
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<strong>Romesh</strong>: What do we know about the relationship between perceptions of the impact of immigration on European economies and the reality? I mean, how much of these failures on the part of educated people to communicate to the populations that immigration tends to have beneficial effects, both for the host countries and for the for the home countries?<br />
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<strong>Tito</strong>: Yes, there is certainly a problem that some of this perception may be driven by media or by other factors, or certainly not so well grounded in facts. The perception about the size of migration may not be that wrong. In a way everywhere in Europe, people do think that there are more migrants than those measured by the statistics, but it is also plausible that this is true. I mean, we know how imperfect are our statistics about migration.<br />
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Where there is really a problem, and this has been quite well-documented by recent work, is on perception about, for instance, exposure to crime rates of migrants. There we don't see in the data, the same type of a perception. We don't get confirmation of this perception. It's not true that migrants are over-represented in the population involved in crime activities, especially small crime. And there doesn't seem to be any relationship between migration and crime. The studies I am aware of even didn't see any of the type of things. <br />
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Well, certainly media coverage is certainly important in influencing public opinion in this respect. For instance, a case that had been investigated quite thoroughly is Italy. In Italy, we got at some point, a very strong perception against migrants driven by this concern about crime rates at a time in which criminal activity was declining. The only thing that was happening was that we were getting closer to elections, and the media were covering a lot the issue.<br />
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You know, one device that they're using in Spain to avoid this type of problem is that when everybody said &lsquo;report about the criminal activity, not the citizenship of the people being involved&rsquo;. That may be a good thing to be done because in terms of the public opinion &hellip; you should public the statistics of course at the end of a year. Have clear statistics stating how many crimes have been committed by this and this, and by nationality as well. But avoiding to present on TV every day, whenever there's a crime, the nationality of those being involved, because that may drive this type of perception, and also bring them far away from reality.<br />
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<strong>Romesh</strong>: How much variation is there in these perceptions of immigration levels and the impact of immigration across countries within the European Union and across different groups according to their education? I mean, presuming somewhere like Spain, now - I don't know if we have the latest data - with very high unemployment, it must be reacting particularly badly to the immigrant population.<br />
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<strong>Tito</strong>: Oh, yes, certainly the countries that have been hit the most hard by the recession, like Spain and Ireland, are experiencing also a very strong deterioration of perception right now. In terms of the characteristics of individuals, what really matters is that education is very important indeed. And the fact that more educated people tend to have better perception about migrants.<br />
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And this cannot be explained by the fact that the better-educated people have a better awareness of the size of migration. Also it's independent of that. So I do think it is a problem related to income distribution - the fact that our educated people, in a way, are less likely to be affected by migration in terms of income distribution effect, because clearly, the pressure on the wage side would be mainly on low-skilled types, insofar as you get low-skill migration. And also in terms of a welfare drain effect, the welfare drain effect is going to hit above the low-skilled type.<br />
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So there are important differences within countries in this domain, and these are quite important and informative as to the nature of this perception.<br />
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<strong>Romesh</strong>: Final question, Tito. What about the impact of the recession, is that going to make a significant dent in the migration numbers? Are more migrants going to go home, or is the fact that we have this welfare state in Europe actually going to retain people even if there are no jobs for them?<br />
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<strong>Tito</strong>: Well, other authors like Tim Hatton have been working on this issue. And actually Vox has been talking about presenting some of the results. They do show that there is a sort of 10 percent rule. So by any 100 more unemployed, a country will get about 10 less migrants coming in.<br />
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Other studies had been working on the effect of GDP growth on migration flows, and there also they found some quite strong elasticity of migration influence in terms of the dynamics of GDP. So in the years in which GDP is declining, you get lowered influence of migrants.<br />
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So I do think that this is certainly going to happen. It depends clearly on the type of migration, on the origin of the migrants, and clearly also on the characteristics of the destination country. Perhaps in Europe, being that we have more social policy, this type of elasticity maybe somewhat lower and make the problem that I was mentioning before even worse.<br />
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Certainly, one thing that I don&rsquo;t think is particularly effective; some countries are introducing schemes to encourage the migrants to go back home during the recession. I think we have all of this return migration, this effect on migration that had been documented by the literature.<br />
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Policies funding or supporting &lsquo;migrants leave our countries&rsquo; are bound to be not particularly effective, may end up wasting money or giving money to people who then come back. So I don't think it's really worth investing many resources in that respect. It is much better to invest these resources in improving the work of our welfare system and make them, as I was saying before, more bright.<br />
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<strong>Romesh</strong>: Tito, right, thank you very much.<br />
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<strong>Tito</strong>: Thank you.</p>