Departement Volkswirtschaft Departement Volkswirtschaftslehre Swiss Immigration Policies and their...

Departement VolkswirtschaftDepartement Volkswirtschaftslehre

Swiss Immigration Policies and their Impacts on the Economy

LSE-Conference on Migration

London, 27. June 2014

Prof. Aymo BrunettiUniversity of Bern


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Content

1. Some Numbers2. Swiss Immigration Policy Regimes3. Economic Effects of Free Movement of Labor4. Regime Change 20145. Conclusions


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1. Some Numbers

> An high share of foreign born people in Switzerland:

— USA: 12.9% (2010)— Canada: 19.5% (2006)— Australia: 26.8% (2010)— Switzerland: 27.6% (2012)


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1. Some Numbers

> A strong recent increase of immigration:

Average immigration— 1982 – 2002: 90’000 per year— 2002 – 2012: 120’000 per year ≈ the population of Bern

Average balance of migration— 1982 – 2002: 25’000 per year— 2002 – 2012: 60’000 per year


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1. Some Numbers

Source: Swiss Federal Statistical Office


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2. Swiss Immigration Regimes

> The Regime between 1970 and 2002— Numerical limits for specific groups of migrants

> The Regime between 2002 and 2014— Free movement of persons

> The Regime after 2014— Numerical limits for all groups of migrants


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The Regime between 1970 and 2002:

> Quotas per economic sector

> Allocation politically decided=> High quotas for agriculture and low-skilled jobs

> Consequence: Low-skilled immigration=> After some years: Inefficient reallocation (see next slide)


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The Regime Between 1970 and 2002Demand Driven Numerical Limits

Agriculture, low-skilled

jobs

Medium-skilled jobs(branch 1)




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The regime since 2002:

> Free movement of persons (FMP) vis-à-vis EU/EFTA

> Integral part of the bilateral treaties with the EU

> Freedom of establishment for EU/EFTA migrants with an occupation or «sufficient funds»

> Accepted by the Swiss population in a series of popular votes


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The Regime Between 2002 and 2014Free Movements Of Persons

low-skilled jobs

Medium-skilled jobs

High-skilled jobs


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3. Economic Effects of FML

> Immigration at the core of the latest rise in hours worked

Source: Michael Siegenthaler, Michael Graff, and Massimo Mannino, „The Swiss ‚Job Miracle‘“


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> Foreign workers do not replace Swiss workers

Source: Michael Siegenthaler, Michael Graff, and Massimo Mannino, „The Swiss ‚Job Miracle‘“


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Effects on hours worked:

> Fact: Swiss work force is decreasing (demography)> Fact: Immigration increases total hours worked

> Consequence: FMP offsets decreasing Swiss work force> Consequence: Eases continued rise in GDP

=> Effect on per capita GDP depends on ø productivity


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Effects on human capital:

Immigrants under FMP are highly skilled:

— 1986-1994: only 15% of the immigrants were highly-skilled— 2002-2010: 51% of the immigrants were highly skilled

=> positive effect on average productivity likely

.


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Effects on wages:

> Empirical evidence (Gerfin and Kaiser, 2011)— Little pressure on wages of highly skilled workers— Wages of medium and low-skilled workers rise


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Effects on unemployment:

> Empirical evidence (increase)— Stalder (2010): Unemployment falls less quickly under FMP

> Empirical evidence (no increase)— Very low and stable unemployment rate— Siegenthaler et al. (2014):

– 65-80% of migration attributed to job creation in Switzerland– 50% have a job when they come


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Other effects:

> Social security system benefits in the short term

> Possible upward pressure on real estate prices

> Pressure on infrastructure utilisation


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4. Regime Change 2014

Referendum on a popular initiative:

> «Switzerland regulates migration independently.»

> «Significant decrease of the balance of migration»

> «Limited number of foreigners allowed to stay in Switzerland, using yearly maxima and numerical limits.»

=> February 9, 2014: 50.3% Yes


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Rual areas (pro) versus cities and the french part (contra)


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Economics: What if initiative is strictly implemented?

— Likely: Some bilateral treaties canceled– Market access of Swiss companies endangered– Free movement of Swiss citizens to EU endangered

— Back to the 70s?– Politics: Low-skilled immigration– Comparatively low growth benefits


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What next?

— Negotiations with the EU

— Implementation of the initiative text

— Likely: Popular vote on the outcome


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5. Conclusions

> Low-skilled migration under numerical limits (before 2002)> High-skilled migration under FMP (after 2002)

> FMP with positive effect on Swiss wealth> FMP without negative effect on Swiss wages> FMP with little effect on Swiss unemployment

> FMP raised balance of migration> FMP raised concerns about migration


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5. Conclusions

> Uncertain future due to the February 2014 vote

> Possible outcomes:— Strict implementation: numerical limits— Mild implementation: combination of numerical limits and FMP— Non-implementation: FMP

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Departement Volkswirtschaft Departement Volkswirtschaftslehre Swiss Immigration Policies and their...

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