The Effects Economic Integration of Migrants Have on the Economy of Host Countries

Abstract

This rapid review synthesises the literature from academic, policy, and knowledge institution sources on the effects economic integration of migrants have on the economy of host countries. The report focuses on advanced countries that host economic migrants from Low- and Middle-income Countries (LMICs). Important conclusions from research on other type of host countries have been included at some points. In most cases, aggregated data does not make a clear distinction between countries of origin, nor does the literature distinguish regular from irregular migration.Evidence suggests that international migration can boost aggregate income (GDP growth) in high-income host countries over the long term. One of the channels for growth is by expanding the labour force and higher wages as international migration can boost capital accumulation for migrants and natives. Another channel is that migrants increase the employment-to-population ratio in host countries, which is particularly important for countries with aging populations. Furthermore, migrants boost capital accumulation and employment through higher foreign investments, international trade and entrepreneurship. Finally, international migrants have a positive effect on aggregate income in high-income countries as they foster labour productivity, boost innovation and complementarities with native workers by increasing diversity in productive skills, leading to economic growth.