Chapter 19 - The Impact of International Migration on Economic Growth in the Global Economy

Abstract

Abstract Recent research suggests that the welfare gains that would result from removing restrictions on international migration are large. The long-run impact of a higher level of international migration on the global economy is potentially even larger if it triggers an increase in the global growth rate, but such a growth rate impact is much harder to determine empirically. We estimate regression models of 1950–2010 decadal growth in most countries of the world and show that a country's net migration in any decade has been neither harmful nor beneficial to growth in real income per capita in that decade, in contrast with natural increase (births minus deaths), which has been harmful to growth. When using lags, there is evidence that in rich countries net migration benefits growth in the long run, while natural increase in these countries generates a demographic dividend for growth after about two decades. In developing countries net outward migration also appears to boost growth in the long run. Hence greater cross-border mobility contributes to higher global long-run growth. We reconcile this empirical evidence with exogenous and endogenous growth theories, as well as with theories of economic geography and agglomeration. We consider a wide range of channels through which migrants can influence productivity growth in sending and receiving countries, such as education and training decisions, skill and diversity spillovers, age structure, entrepreneurship, trade, remittances, and clustering.