Friday, September 19, 2014

The Immigration Game

Green Papers, as they are called in Europe, or White Papers, as they are known in America and Britain, are often mere rhetorical essays – government-backed studies that state broad principles unlikely ever to be applied in practice. The recent Green Paper released by the European Commission on international migration is no exception.

Indeed, the Paper is a hodgepodge of illogic and half-baked ideas that aims at “launching a public debate” on the issue, “choosing a bottom-up, rather than a top-down approach.” But while the objective is to “harmonize policies towards economic migrants across the EU,” the Paper states at the outset that decisions on this matter should remain solely under the jurisdiction of national governments. Some of the rules that it proposes are unenforceable – and thus merely a source of red tape for migrants and their employers that would require huge public bureaucracies to administer.

Co-ordination of national migration policies will remain a dream if decisions continue to be kept under the exclusive responsibility of national governments. There is no sign in the EU that national regulations on economic migration are converging.

Policies on migrants are becoming increasingly tough, especially in those countries that already had the most restrictive provisions. Since 1995, there were 26 reforms of migration policies in the EU-15: two-thirds tightened regulations by increasing procedural obstacles faced by visa applicants, reducing the duration of work permits, or making family reunification more difficult.

Countries are getting tougher because migration flows can be diverted across jurisdictions. This raises concerns among public opinion that migrants rejected by some countries could flood those that do not impose tighter restrictions.

Cross-national policy spillovers are frequent. Finland tightened its immigration regulations in 2004, following closely the restrictive stance taken by Denmark in 2002. Portugal adopted more restrictive provisions in 2001, after Spain implemented a similar reform in 2000. Ireland did the same in 1999, after the UK enacted two reforms in 1996 and 1998 designed to curb immigration.

This race to restrict pervaded decision-making on transitional arrangements following accession of 10 new members – eight of them postcommunist countries – to the EU last May. Twelve of the 15 countries reneged on promises not to restrict worker flows from the new members as they realized that Austria and Germany were closing their borders to immigration from their eastern neighbors.

But tight national restrictions do not seem to prevent migration; they only alter the geographical orientation of flows and fuel increases in illegal immigration, thereby inflating the size of the informal economy. Indeed, illegal immigration is larger when restrictions to legal migration are tight. Illegal flows as a proportion of the population are about 25% larger in Europe than in the US; at the same time, legal flows are roughly 25% larger in the US than in Europe. The US also has more realistic migration restrictions than most European countries.

Realistic restrictions in Europe can be adopted only by taking into account migration spillovers across jurisdictions, which requires implementing policies that are agreed at the EU level. But national governments remain reluctant to delegate authority: in November 2004, the European Council accepted qualified majority voting on measures concerning illegal migration, but left restrictions on legal migration subject to unanimity rules, as if legal and illegal migration were not merely two sides of the same coin.

The Green Paper will not make EU leaders change their minds. It states that national governments can better “respond to the specific needs of their labor markets.” It does not stress the obvious advantages of having the EU as a unique player in enforcing border controls, signing cooperation agreements with migrants’ countries of origin, and encouraging the type of flows that are best suited for Europe.

The Green Paper also suggests that, when admitting migrants, member countries “require proof that no one already part of the domestic labor market can fill the vacancy concerned.” It is unlikely that this would be possible even under central planning. Migrants change jobs twice a year on average, as they “grease the wheels” of European labor markets with their mobility from less to more productive jobs. Should we prevent them from doing so?

Similarly, the Paper proposes that the self-employed should be admitted after an evaluation of their business plans. In Milan this year, more foreigners than Italians registered as self-employed. Who will examine their business plans? Even if the Paper’s suggestion were plausible, which it is not, it begs a larger question: should we prevent migrants from taking entrepreneurial risks?

If taken seriously, these rules will accomplish nothing, except to force migrants and their prospective employers to find other ways to each other. The European Commission’s Green Paper on immigration looks like an invitation to join the underground economy.

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