Immigrants and Economic Growth
Thomas Fuller of the International Herald Tribune recently reported on the success of immigrants from the former East Bloc in the three EU countries that admit them without limits: the U.K., Ireland, and Sweden. All three economies are healthy, but is that cause or effect? Or, as I suspect, do both phenomena share an underlying cause? By European standards, all three regulate labor markets and business formation fairly lightly, though Sweden, of course, has famouslyl high taxes. Here's an excerpt from Fuller's article:
It turns out the doomsayers were partly right: Nearly a year and a half after the expansion of the European Union, floods of East Europeans have washed into Britain.
Poles, Lithuanians, Latvians and other Easterners are arriving at an average rate of 16,000 a month, a result of Britain's decision to allow unlimited access to the citizens of the eight East European countries that joined the EU last year.
They work as bus drivers, farmhands and dentists, as waitresses, builders, and saleswomen; they are transforming parts of London into Slavic and Baltic enclaves where pickles and Polish beer are stacked in delicatessens and Polish can be heard on the streets almost as often as English.
But the doomsayers were also wrong: Multicultural Britain has absorbed these workers like a sponge. Unemployment is still rock-bottom at 4.7 percent, and economic growth continues apace.
Since May 2004, more than 230,000 East Europeans have registered to work in Britain, many more than the government expected, in what is shaping up to be one of the great migrations of recent decades.
Yet the government says it still has shortages of 600,000 workers in fields like nursing and construction.
"They are coming in and making a very good reputation as highly skilled, highly motivated workers," said Christopher Thompson, a diplomat at the British Embassy in Warsaw. "The U.K. is pleased with the way it's progressed over the first 16 months, and we're confident it will be a beneficial relationship for both sides in the future."
Tens of thousands of East Europeans have also moved to Ireland and Sweden, the only other West European countries that opened their labor markets to the new EU members.
With nearly full employment, Ireland's booming economy still needs workers, and immigration is actively encouraged. More than 128,000 East Europeans from the new EU member states registered to work in Ireland from May 2004 to August this year.
Irish society seems to be adjusting to the newcomers, 45,000 of whom come from Poland. A newspaper in Limerick now runs a column in Polish; last summer the national bus company began a daily service from Dublin to Warsaw.
The phenomenon is more subdued in Sweden, where about 16,000 workers from the new EU countries registered with the authorities between May 2004 and early October this year. A substantial majority, about two thirds, were Poles, followed by Lithuanians and Estonians.
Fearing a massive influx of East Europeans after enlargement, other West European countries threw up barriers that will be lowered only gradually over the next decade. A Pole seeking to work in France, for example, still needs to apply for a work permit. France issued 737 such permits to Poles in the 10 months after enlargement; that is the number of Poles who arrive in Britain every two days.
Poles who go to Britain, in contrast, do not need any special permission.
In fact, Britain is so eager to recruit more Poles, by far the largest group of entrants since May last year, that British embassy officials in Warsaw have distributed brochures at Polish unemployment offices "so that if people wanted to go to the United Kingdom they had good information," Thompson said.
My latest NYT column looks at scholarly research suggesting that the wave of immigration in the 1990s did not, in fact, depress overall wages of American-born workers. What both stories share in common is a dynamic perspective. Over time, immigrant workers don't just fill existing job openings. In aggregate, they add to the total resources available for economic growth, making new capital investment more profitable and native-born labor more potentially productive.