“AT LEAST HALF of the popular fallacies about economics,” wrote Thomas Sowell, a conservative economic thinker, “come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else.”1 Perhaps, Mr Sowell exaggerated. But it is beyond doubt that when Adam Smith first eloquently attacked the views portraying economy as a rope war in the eighteenth century, he did not make the misconceptions to vanish.2
Between 2015 and 2016, Viktor Orbán, the prime minister of Hungary, has spent over €50 million taken from public budgets to flood the country’s advertising channels with anti-immigrant warnings. One of these messages placed on billboards cautioned immigrants not to take away jobs of natives (in Hungarian).3 Yet it is clear from a brief look at statistics that there is something wrong with the idea that immigrants must take the jobs of natives: At the end of 2015, over 30 million foreign-born people worked in the member states of the EU. But only 22 million people were unemployed.4 It is evident that some immigrants could not have taken a job from a native: the positions that they occupy would not exist, had they not been in our countries.
More than six out of ten Hungarians believe immigrants take jobs away. The same with Czechs.
But still, isn’t it likely that a sudden arrival of strangers eager to work will put some locals out of a job? Mr Orbán is certainly not the only one to think so. More than six out of ten Hungarians believe immigrants take jobs away. The same with Czechs. And even many Western Europeans assume that immigrants take, rather than create jobs (see graph).5
How comes there are positions for strangers if natives are unemployed? To find out, we have reviewed 20 empirical studies that together provide a coherent picture of immigrants‘ impact on natives‘ work life in Europe and the Middle East between 1990 and 2015.6 Among these studies, we have found little evidence that could make Central European politicians worry that accepting a reasonable number of refugees and regular migrants from the developing countries might push native-born workers out of a job.
This has several reasons. First, businesses are adaptive. Mexican immigrants in the southern United States, for instance, often harvest grapes. If they weren’t available, some of the grapes would be harvested by machine. Conversely, the British National Farmers Union today promotes automation as a response to migrant labour shortages following Brexit.7
Second, immigrants offer different skills to employers. Even those immigrants of similar age and education usually cannot replace the natives.8 The substitutability is particularly low with the so-called culturally-distant immigrants from developing countries. In Sweden, for instance, a small downward pressure on wages was documented with the increase of immigrants from the neighbouring countries. But with the increase of immigrants from afar, the effect was missing altogether (see article)9
Third, even if immigrants have very similar characteristics and work in the same industry as natives, they often complement natives rather than compete with them for the same spots. Since the immigrants usually don’t speak the local language perfectly when they start working, they flow into low-skilled sectors that often did not exist before and push the natives into better-paid, higher positions.10 Based on the data from 11 EU countries between 1995 and 2001, Cristina Cattaneo and her colleagues estimated that if the share of immigrant employees rose by ten percentage points in a profession, the probability of promotion for local employees grew by 16 percent within the first two years.11 Similarly, as immigrants offer housework at more affordable rates, well-educated housewives start working in better-paid jobs, as Libertad González and Fracesc Ortega showed in the case of Spain after 2000.12
In this context, the research offers a lesson for the policy-makers. Based on an analysis of 15 European countries between 1996 and 2010, Francesco D’Amuri of the Bank of Italy and Giovanni Peri of the University of California suggest that stringent labour market regulations slow down the adaptation processes described above.13 This is supported by the particularly optimistic results that Mr Peri and Mette Foged of the University of Copenhagen later found when studying the influx of refugees in Denmark, a country with one of the most flexible labour markets in Europe.14
While immigrants bring a perspective of eventual economic benefits, the empirical studies reveal three scenarios in which detrimental effects were felt at the time of immigrants‘ arrival.