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Quantity over quality

Recerca | 15/02/2008

The economic impact of immigration in Catalonia

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Despite substantial immigration, production tends to increase but productivity declines. The effect on wages and welfare is slightly positive, whereas challenges in education and demographic strain can jeopardise future development.


Two researchers from IAE-CSIC argue that benefits from immigration in Catalonia are open to controversy. In a 2008 study commissioned by CETC, Fernández-Huertas and Ferrer-i-Carbonell choose to walk the middle path, contesting both over-optimistic and clearly alarmist claims. An indisputable fact is the considerable population increase, due to the arrival of some 0’7 milion people in less than ten years, bringing up the share of alien citizens to 15%, a leap which in neighbouring European countries took over four decades.
Many newcomers are low educated and offer a low-income profile, hence complementary to the existing employment force. Others are well educated and influence wage competition and employment substitution. Overall the net effect is positive but very small, providing very limited added value. Production has risen at an average 3% per year, whereas productivity has not improved and shows an annual fall of minus 0’6%, both figures being lower than those for the rest of Spain. The production path “chosen” by the Catalan economy in recent years is indeed low productivity, but this cannot be assigned to immigrants only. For example, the building boom has been supported by massive incoming labour, but it actually responds to other factors (pessimism regarding pensions, low interest rates, foreign investment…).
Welfare standards have not suffered, due to higher employment and alleviating instead the pressure of an ageing local population, although more than a lasting solution this appears more like a recess (until the moment when newly arrived workers attain retirement age). Concerning education, the impact is minor but could worsen when greater numbers of immigrant students start to enter secondary schooling.
The main area of concern, thus, lies in demographic trends. Even when using more conservative estimates than in a constant migration-rate scenario, challenges are huge. Summing up, the paper calls for strong integration policies, not simply observing ethical or cultural reasons, but indeed obeying economic motives, in order to improve educational achievement, sustainable welfare and the basic underlying keynote –a firm increase in productivity.

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Imatges


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