Socio-Economic Effects of Immigration in Greece

Abstract

The undocumented economic immigrants (UEI) in Greece (about half a million since the early 1990s, forming the bulk of the immigration to the country) find jobs because of their wage and job-flexible labour and the rigidities in the Greek labour market. They have positive effects on the GDP through the increase in the supply of labour, and there is evidence that they also contribute to relieving the inflationary pressures on the economy. The immigrant-induced unemployment, the decreasing effect on real wages and the adverse distributional effects on income appear to be limited, but other tangible and intangible socio-economic costs are likely to be significant: the UEI expand further the underground economy, although their work is not among its main causes; they – among others – are often subject to exploitation, which exposes Greece to criticism that it benefits from their labour without offering them any opportunity to integrate economically and socially. Despite ample evidence that the recent increased criminality in Greece is mainly due to individuals and organized gangs who enter in order to commit crimes, usually in close collaboration with local people, many Greeks believe that the UEI are the main cause. Finally, by restricting increases in real wage costs, the UEI may have diminished the efforts to increase capital investment and economic restructuring. Until January 1998, when the five-month registration period for their regularization started, the undocumented immigrants – mostly young people without their families – had a short average stay in the country and no civil rights. Consequently, the ‘positive’ demographic and social effects of immigration have been limited.