Last week, following the dispersion of harrowing images of human suffering coupled with increasing public pressure, some previously resistant European leaders began to warm up to the idea of allowing more Middle Eastern migrants into their countries. Many Europeans—notably, those in Sweden, Iceland, the Greek Island of Kos—have been caring for the refugees, acknowledging the probable economic burdens but letting compassion subsume them. Others in Europe, though, hesitate out of fear that migrants will take jobs, threaten social cohesion, and raise welfare spending.
An influx of migrants might indeed have negative effects on native workers’ wages—that’s why some nations are banning the migrants from working—but sometimes, the effects of a migration can have a positive effect on native workers’ wages. The effects of a mass migration on the labor market differ from case to case.
Economists generally agree immigration is mostly good for a nation. They even have a term for it: “Immigration surplus” refers to the positive effect immigration has by creating new demand for goods and services, which encourages employers to hire more people. And if migrants replace incumbent workers, even though wages are lowered, goods and services are produced more cheaply. In 2007, the White House concluded that immigration to the U.S. has an overall positive effect on the country. The winners are broadly distributed and the primary losers are incumbent workers, whose wages fall until the resulting economic growth boosts their wages in the long run.