Anti-immigration sentiment has been rising in the U.S. and Europe as the economic slump deepens. But how has the relationship between mobility and the economy played out historically? How have economic crises affected immigration and global flows of people?
A new study by economists Timothy Hatton of the Australian National University and Harvard’s Jeffrey G. Williamson takes a close look, examining changing patterns of global mobility and immigration, as well as shifts in public opinion toward immigrants in light of major economic cycles. And they find that previous economic crises in the U.S. and other advanced nations have led to sharp declines in immigration and global mobility.
[T]he rise in unemployment abroad had nearly three times the effect on emigration from the UK between 1870 and 1913 as a rise in unemployment at home. During the slump of the early 1890s, gross immigration to the US fell by half and net migration to Australia evaporated. During the Great Depression, net immigration to the US, Canada, Australia and Argentina turned negative as new immigration virtually ceased and as previous immigrants headed home …
But how big are these effects? Where immigration policies are not too restrictive, history tells us that every 100 jobs lost in a high-immigration country results in 10 fewer immigrants. This 10% rule described countries like Canada and Australia in the Great Depression, and it worked pretty well for other periods too. During the severe 1890s depression in the US, net immigrant exits reduced the unemployment rate by about 1.6 percentage points.
The following graph from their study shows the relationship between the unemployment and the net immigration rate per thousand of the population (including illegal immigrants) for the U.S. between 1990 and 2004.
Interestingly enough, anti-immigrant sentiment in the advanced countries has been kept at bay during the current slump: Hattel and Williamson conclude that the “current world crisis will reduce immigration, and the long-run pressure to immigrate will continue to ease after it is over.”
One of the most powerful, though least understood, effects of economic crises is their ability to alter global talent flows. Economic history shows that major economic crises like the current, can and frequently do produce considerable alterations in global flows of talent - particularly high-skill, highly inventive, and highly entrepreneurial immigrants. The U.S., which had previously been sending its own talent abroad for scientific and technical training, gained immeasurably from a massive inflow of high-skill immigrants during the crisis of the late 19th century and perhaps even more so in the flood of scientific, artistic, and entrepreneurial talent during the Great Depression.
The current crisis holds out the potential to again reset the flow of global talent. If so, this could have even bigger consequences than in previous times – and for an obvious reason. Economists agree that economic growth and technological innovation today revolve around human capital. We also know that innovative and entrepreneurial talent is highly mobile, highly skewed, and highly clustered geographically. Foreign-born talent composes an estimated third to half of all recent Silicon Valley high-tech start-ups, according to recent studies; and foreign-born engineers make up a huge percentage of their technical staff. The countries and regions that nurture, attract, and retain global talent gain enormous economic advantage.
We may be in the early phases of such a talent reset today. More potential immigrants appear to be choosing to stay home, as Hattel and Williamson note, partly because conditions in several of the most important emerging economies like India and China have improved, relatively speaking. And a number of countries like Canada and Australia, and some in Scandinavia and Northern Europe, have upped their own efforts to attract high-skill immigrants. The U.S. with rising anti-immigrant sentiment, homeland security restrictions, and declining economic opportunities may be seeing its talent advantage wane.
Global talent flows can shift quickly. And, the global competition for talent is a game that is played at the margins. As I outlined in Flight of the Creative Class, while no single one country has to replace America as the predominant destination for global talent, many countries appear to be improving their relative position. Say 10 or 20 percent more of China and India’s top talent decided to stay put, while countries like Canada, Australia, and others up their draw by five or 10 or 20 percent. Those numbers add up quickly.
Anti-immigration stances and other measures that impede talent flows may offer some political gains, but they will only undermine long-run innovation and prosperity. Those nations and regions that maintain and expand their ability to attract global talent will emerge as global winners when economic growth rebounds.
May 13th, 2009 at 8:24 am
The synchronized global nature of this recession is something more rare. Immigrants tend to move to places with more perceived opportunities. In the past, if the US was in recession, other world countries — developed and developing — may not have been. So naturally, people would flow to where the jobs are. (Anti-immigrant sentiment would accelerate that, of course.)
The 1930s became a boom time in Brazil and many other less-developed-countries of the time, for example.
It’s looking like India and China (two major sources of immigration) are doing better than the USA, so it would make sense for people to flow to those countries right now (especially their own nationals who were in the US working). But China and INdia’s export oriented goods and services are suffering, which could deter some talent from going/returning.
Moreover, outside those two places, things are not necessarily that much better — or worse — than in the US, given the synchronized nature of all this.
So it will be interesting to watch immigration flows in this more rare global event.
May 13th, 2009 at 9:44 am
First you have this:
During the Great Depression, net immigration to the US, Canada, Australia and Argentina turned negative as new immigration virtually ceased and as previous immigrants headed home …
Then you have this:
The U.S., which had previously been sending its own talent abroad for scientific and technical training, gained immeasurably from a massive inflow of high-skill immigrants during the crisis of the late 19th century and perhaps even more so in the flood of scientific, artistic, and entrepreneurial talent during the Great Depression.
Don’t they contradict one another?
The only anti-immigration stance I see is the one against ILLEGAL immigration. And that has more to do with being against breaking the law than being against immigration in general.
In fact, the best way to address anti-immigration feelings in general would be to stop illegal immigration cold.
With so much opportunity in China and India now, we should really just expect immigration from there to totally dry up. This is not a bad thing. We need these developing countries to develop as quickly as possible, to alleviate human suffering. If that is a net negative to Silicon Valley, so be it.
May 13th, 2009 at 11:59 am
It’s always struck me that the one piece of the jigsaw that’s been missing from the current (1950- or perhaps 1990-) episode of globalization is labour.
Everything else – goods, capital (both financial and direct investment), ideas/technology, and increasingly services – was all up-ticking nicely and mostly surpassing the relative intensities of previous episodes of globalization.
Labour, which if faced with poverty could hop on a boat 150 years ago and start a new life, doesn’t have that luxury now. Given that the more entrepreneurial types are more likely to migrate, it’s a pity that the era of the nation-state has led to restriction on freedom of people. Perhaps the forthcoming era of the city (*crosses fingers*) might see greater freedom for people to move again.
(Sorry, feeling in philosophical mood today!)
May 13th, 2009 at 2:51 pm
Europe is standing at an interesting fork in the road in regards to immigration. Assimilation into European life is harder than in the US, but the demographic realities of an aging Europe will force the issue one way or the other: Do we bring in immigrants (to support us with our entitlements) or do we wither away? The aging of Europe is only going to become more pronounced in the next decade.
May 13th, 2009 at 2:52 pm
Buzzcut,
I don’t think those Depression figures contradict. The first, net immigration, is raw numbers and would be mostly laborers moving for economic reasons. The second, high skilled talent, included many thousands from Europe fleeing Hitler and to some extent Stalin.
My gauge on anti-immigrant feeling is my aunt who lives in Salinas who rants against immigrants in general. Questioned closely she might make a legal/illegal distinction, but broadly it’s all those foreigners coming here to get welfare and taking all the jobs (doesn’t see any contradiction).
I also got my mother’s right-wing junk mail for a couple of years after she moved to assisted living. The English First and anti-immigrant propaganda didn’t distinguish legal or illegal, except to imply that all were illegal.
May 13th, 2009 at 3:50 pm
Michael, if new immigration “virtually ceased”, how was there a “flood of scientific, artistic, and entrepreneurial talent during the Great Depression”?
Don’t get me wrong. There was undeniably a surge of brilliance fleeing the Nazis and then the Soviets. But was the reality of the situation that we picked and choosed who entered, and that on net, we took in very few in this era? I think that that is exactly the situation.
I’d like to see the numbers, and how it compares to, say, the H1B visa numbers from the last few years. You might be able to make the exact opposite argument to the one that Richard is making (you can have extremely low immigration and still get the few immigrants that you really need).
And let’s not forget that the era from ‘32 to ‘65, during which there was virtually no immigration, contained many, many years with high economic growth.
As for your mother… I don’t know. People like her are pissed off at how Mexican immigrants are changing the nature of vast swaths of this country. I can see how, if that’s your beef, it really makes little difference if they’re legal or illegal.
BTW, my grandmother, the daughter of German immigrants, gets her blood boiling on the issue of Mexicans and others not speaking English. She speaks fluent German, and feels that her parents were forced to learn English, so why shouldn’t more recent arrivals. I don’t see this view as anti-immigrant. It’s something else (common sense, mostly).
May 13th, 2009 at 7:50 pm
In the first part of the 20th century, most of the European immigrants didn’t speak English. The majority were country folk, not well educated when they came here. And in many American cities there were German speaking enclaves, at one time the US had 800 German language newspapers.
http://german.about.com/library/weekly/aa071299.htm
But their children spoke English. Just as the vast majority of Mexican and other Hispanic second generation speak English and the third generation generally speak no Spanish. They’re going to speak English, it always happens. In fact, most of the first generation I know speak some English (much better than my Spanish), many fluently.
My personal view is we should be doing all we can to have immigrant families teach their children the native language. Your Grandmother is a great example by being bi-lingual. We’re losing a tremendous resource in international competitiveness by not taking advantage of these languages. Think if American companies could send essentially native speakers to countries around the world.
Among my clients is a Somali refugee organization. The woman I work with most speaks Somali, Swahili, good English and some Italian (The refugee camps are in Swahili-speaking Kenya, and Somalia was an Italian colony pre-WW II). Her 2 year old will only speak English, somewhat to her dismay, although he understands Somali.
One of my son-in-laws family is Basque, another is Indian (by way of Guiana). Both only speak English, to their disappointment.
May 13th, 2009 at 7:54 pm
Forbes Magazine’s Rich Karlgaard suggests that start-ups are driving what Rich calls “An American Heartland Renaissance.”
http://blogs.forbes.com/digitalrules/2009/05/an-american-heartland-renaissance.html
Evidently, some of the best and brightest WILL move to the hinterlands.
How likely and how sustainable do you think this is?
May 14th, 2009 at 7:30 am
Evidently, some of the best and brightest WILL move to the hinterlands.
That’s speculation (and perhaps wishful thinking) on Karlgaard’s part.
Michael, what gots your mother lit was things like bilingual education and prinitng voter ballots in foreign languages. Going out of our way to accommodate those who don’t speak English. Hard to see how someone who doesn’t speak English well could pass our citizenship test. It’s almost a red flag that voter fraud is occuring, with non-citizens voting.
#115 on SWPL: Promising to learn a foreign language.
May 14th, 2009 at 10:35 am
From “a nomadic life”
An uprooted population, globally inclined, aware of the fact that jobs will be scarce is likely to give away its current address in exchange for some job security. In particular if those jobs are in tune with the zeitgeist…
http://global-culture.org/blog/2009/03/26/a-nomadic-life/
May 27th, 2009 at 10:23 am
[...] Update #1: Economic Crisis and Mobility by Richard Florida. [...]