Global Utmaning
Alessandra Venturini, University of Turin and CARIM, EUI, Florence
This brief note rounds up the reasons why a common European integration policy is advocated. It starts
by explaining the reason why permanent migration is needed in Europe and thus integration necessary.
Than we do not enter into the endless debate upon the more appropriate way of defining the process
named occasionally “inclusion, accommodation, incorporation, etc. ” but instead we take a pragmatic
approach. We focus on the main components of the economic integration namely integration of foreigners
into the labour market and into the welfare state, and we present the main results of the economic
research on these two issues. Than we survey also the less settle debate on social and cultural integration
of immigrants, which assist the economic integration. The paper closes with a tracking shot on the
policies which could favour the needed integration and which should be case specific but framed in an
unique approach.
Is Europe in need of Migrants?
The discussion on an integration policy for foreign nationals has to start by arguing that Europe needs
migrants, and the reasons presented are at least three.
® The first one which is also the most impressive, follow a Population approach. In Europe fertility is
declining, the composition of the population is changing, but even more important the total amount of the
working population is declining. The European Labour force (age 15-59) is 313 million in 2010 while
without migration in 2050 will be 246 million or with similar migration inflows 299 million. The stock of
EU27 working population is reducing by(? 4.5% every 10 years or 4.5% if the inflows continue. And the
reduction of the working population implies a reduction in consumption, in production which engenders
an even larger decline in employment and thus in active population (Philippe Fargues, 2011,International
Migration and Europe’s Demographic Challenge, RR2011/9 ).
Even if active social policies - which support families with many children - and labour market policies -which
favour the labour market participation of woman with many children- can contrast the decline or even
favour the increase of the fertility rate, they are unable to bring the fertility up to the transition rate
needed to have a balanced population. Women face a double challenge as being on the one hand agents
of reproduction and on the other hand needed in the labour market. The possibility of introducing “special
support policies” to favour their employment is contrasted by the global competition in the goods market
which reduces the profit margin of the firms and thus discourages the hiring of “costly” workers, while the
possibilities of introducing subsidies is unfeasible in countries with very large fiscal deficits.
To reinforce the demographic and economic approaches which point out to the detrimental effects of a
reduction of the stock of the total European population, the socio-political approaches point out that the
population magnitude is essential to remain a major player in the international area and that is in the
interest of all the European citizens.
Thus to contrast the scenario of a smaller and smaller and of an older and older Europe, the only solution
both in the short and in the medium run and probably also in the long run is migration, namely additional
population. This approach ascertains migration as a permanent mouve, thus migrants should see
themselves as European citizen to reinforce or slow down the decline of the economic and social role of
Europe and thus migration is strictly intertwined with integration policies.
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® The second approach is considering the aging of the European population which creates an important
fiscal imbalance of the pension system and in general of the Welfare. The share of the “retired” is
becoming larger than the share of “workers” contributing in the welfare state. If in 2010 the EU27 member
states’ population above 60 years old, who are proxy for the potential retired is 116 million, namely 23%
of the total population, and the 15-60 years old, namely the working population is 61% of the total
population, in 2050 the share of the potential retired will be 36% l and the potential working age (15-60)
population will be only 53% of the total. The aging of the European population is very uneven. It is more
important in Italy and Germany, but it is relevant also in the new accession countries Poland and Latvia
where emigration is aggravating the population unbalance.
The figure below derived from the cited research shows for the EU27 member states the increase in the
dependency ratio namely the share of people above 65 years old on the working age population 20-65
years old. What emerges is that in the ‘50s the let us call the “old” were only on average 15% of the
working age population, while now they are 28% of the population and in the future they will reach an
average value of 50% with much larger variation among the EU countries. In addition it shows that Europe
is comparative older than the other countries in the world.
Fig.1: Old age dependency ratio 1952-2050
70%
Pop
ulati
on
65+ /
2065
60%
50%
27 MS
40%
30%
World
20%
10%
0%
1950
1970
1990
2010
2030
2050
Source: Philippe Fargues, 2011, Author's calculation based on UN Population Data Online
o
The simulation made to keep the actual dependancy rate forces (see Fig.2) to postpone the retirement age
to 75 years old which at the moment looks unfeasible.
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Fig.2: Age at retirement necessary to maintain old age
dependency ratios at 2010 level
80
Age in75
years
27 MS
70
65
2010
2020
2030
2040
2050
Source:Philippe Fargues, 2011 Author's calculation based on EUROSTAT projections
The pension system is crucial to grant an intergenerational social cohesion, and the public pension
systems are in general based on the” pay as you go” system, namely the contributions paid by the workers
are used to pay the pension of the retired, thus a balanced population is crucial to make them functioning.
Only a complete insured type pension system does not need a balanced population but none of the EU
pension system is only based on it. The large fiscal deficit of all the European countries, in few cases
alarming, is also reducing the possibilities to finance the pension deficit through the general taxation, and
also push versus a reduction of the welfare granted to nationals.
The ageing of the population is also important in the socio-political dimension, because if it has a short run
cost, it also has a long run impact in the propensity to innovate and in the increase in conservative
tendencies which do not favour neither the economic nor the social development.
As in the previous approach migrants are needed, in particular working migrants, thus their economic
integration is implied.
® The third approach is merely economic. In this view migrants are “greasing” the wheels of the European
economies. With this wording the attention is focused on the flexibility provided by foreign labour in
economies where the attachment to the national culture and language plus the welfare provided by the
state discourage the internal mobility. The increase in income per capita of the European population has
reduced their propensity to mouve (Italians, Spanish, Portuguese for instance). Many of them are now able
to choose they preferred location, namely staying home with their family and relatives. For the less
advantaged the welfare policies of income support and the family network represent a form of income
sustenance which as well reduced the propensity to mouve and it is relevant even more for the
unemployed. In this scenario foreign labour represents a buffer able to satisfy excess demand without an
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increasing production costs. The empirical research has also shown that foreign labour is complement to
domestic labour, thus it is not displacing the domestic labour force. On the contrary it discourages the
delocalization of foreign capital abroad, thus is even more beneficial for native workers in the area where
they are employed.
However foreign labour to be beneficial has to be employed and not depending on the welfare state, thus
an integration policy at least for the social-economic dimension is needed.
Just to conclude this section either Europe accepts to change its socio-economic role, and quality of life or
immigration seems both a necessity and an opportunity which has to be exploited by reducing the possible
outlays.
Integration in the labour market: introduction
The economic research has dedicated large attention to the economic integration of migrants. With this
wording is meant if a foreigners with similar characteristic (age, education, skill, tenure on the job for
example) has through time the same wage profile, namely the same wage growth and the same probability
of being employed. In general a foreign worker at arrival receives an entrance wage below a similar native
one. The initial lower wage discounts the risk of lower productivity due, for instance, to initial lower
language proficiency . As long as the migrant remains in the destination country the initial gap should
decline, if the integration in the labour market takes place.
Usually three cases are possible: assimilation, over assimilation and under assimilation.
Assimilation means that after an initial difference in the wage profile between two similar workers the
wage profile become similar. Over assimilation means instead that the wage of the foreign worker increase
at a higher pace and over perform the native wage profile. This result was explained by considering that
migration is a selective process and thus that among the total native population only the brightest or the
most clever will migrate and thus they will over perform the average native. The under assimilation on
the contrary means that the wage of the foreign worker starts below the one of the native and remain
always below.
The empirical research has shown that the second case is much more frequent than the first one in North
and as well South Europe.
Integration in the labour market: Why it takes place? And what it imply?
Let us answer first to the second question. It implies that migrants would be more unemployed than
natives and given that they have more options and rights in the destination countries than in the origin
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one, they will likely remain in the destination countries, even if unemployed and they will be more in
demand of welfare support. The causes, instead, of under assimilation are in many cases specific to the
type and management of migration adopted in the country of destination but some more general
indications emerge.
Integration in the labour market: Causes
The limited knowledge of the language spoken in the destination country is more and more becoming a
reason for the little progress in the career of the foreigners. Even the manual job demands ability related
to the knowledge economy. Living in a close ethnic enclave reduces both the knowledge of the language
of the destination country but also the contacts with the population and culture of the destination. If the
community is not well organized as job placing agency this also reduces the knowledge of job offers and
possible upgrading. The Danish experience with a group of refugees is, however, suggesting that in the
initial phase living in an ethnic community strongly favour the transition from the country of origin and the
country of destination, but remaining in an ethnic enclave tends to create a “small world” which produces
an auto-segregation both socially and economic. This is also the example of the Italian community in New
York which has created “Little Italy”, which not only has reduced the integration in the society of
destination but has also lost contact with the evolution of the origin country.
Very few economic studies analyzed the integration of the second generation of migrants, while social
scientist has devoted large attention to this issue and to the roots of the problematic integration of the
sons and daughters of immigrants. A special role has always played the education and the territorial
segregation where the children have grown up.
Another possible reason for the lower economic integration of migrants is more endogenous to the
calculation. If the migrants entre the destination country in a period of recession, they have “worse” job
offers, thus they are less able to upgrade. Especially now, during this long recession, the job-options
available provide less opportunity for upgrading. However, the studies which are able to control for the
time of entrance into the labour market find, also in this case, a lower wage profile for the migrant and they
impute it to the low level of mastering the destination language and of ability needed in the new
technological processes.
Also the variable education is contributing in creating confusion and expectation. The use of number of
years of education as a proxy of the human capital accumulated adopted in national studies is now
exported for international comparison, while the quality of the education is not controlled. As is well
known already inside the European Union, the free circulation of the educational degrees is contrasted by
the different content of the education, and outside Europe the differences are even larger. We can control
with a national fixed effect which, however, capture all the fixed effects thus is not controlling only for the
quality of the education .
We have to add to this list a possible occupation-segregation which lives to the migrants only jobs in
sector with low wage and low job progression or an open discrimination versus the foreign workers. The
occupation segregation is frequently explained by using the embodies abilities argument which explains the
larger productivity of the foreigners in a given sector or skill, but more detailed analyses point out also to a
preferential hiring and upgrading of natives. It is not a consolation but the discrimination of migrants is,
however, always lower than the female discrimination.
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The selection of the migrants which can cause over-assimilation can on the opposite cause also under
assimilation but the mechanism is more complex that what it looks at first glance. Even if the migrant are
positive selected, namely the best are mouving from the origin country, not all of them will remain in the
destination country, and if the worse remain, it can explain the under assimilation of the migrants. Where
the best are gone? To other destination which offer a higher return of their human capital or they return
home. United States, Canada and Australia and to a smaller extent also the United Kingdom offer higher
wages, they have what is named a wage premium, thus the brightest tend to go there, where their skill is
more remunerated.
Migration is not always a permanent project. In many cases, especially with labour migration, the mouve
is considered by the migrant a temporary investment and the temporary Intention of staying reduce the
specific investment in the human capital in the destination country.
Is it appropriate to incentive the transformation of temporary migration into permanent one by forcing or
encouraging the integration? The European countries need both thus probably a sequential approach to
integration has to be adopted.
Integration in the Welfare State: introduction
Also the integration in the Welfare state implys that the migrants do not use the welfare namely the
unemployment subsidies, the public health system (where it is public), the social services , the public
education etc. more than the natives.
The different welfare legislations and the different characteristics of the migrants create a large variety of
different cases, in many occasions very specific and thus in need of targeted interventions . Some
regularities, however, emerge.
The idea of a welfare shopping by the migrants, namely that the migrants choose the destination countries
according to the generosity of the welfare system lanced by Jorge Borjas in 1987? has not found large
evidence, not even in Europe where the welfare state is more generous than in the USA. If it exists is very
limited.
Instead large evidence has been found on a larger average use by the migrants of the welfare in all the
European countries. The results is not surprising because the migrants family are in the lower bracket of
the income distribution and hold more children, thus they are more likely to be included in the categories
eligible to the benefits and at risk.
Integration in the Welfare State: specificities
The word welfare state or social expenditures include many different components.
If following the FRD research on EU-SILC data for all the European countries, we distinguish between
contributory benefits - designed to cover against the risks of unemployment, longevity (pension), sickness,
disability and survivor’s pension- and non contributory benefits -family and housing allowance and
transfers targeted specifically to groups with higher risk of social exclusion- and the incidence of the
migrants differs. The migrants use the contributory benefits less than the natives, while are more present in
the second group.
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When, however, the first group of benefits is disentangled, the under representation of the migrants is
driven by the lower amount of pension that the migrants receive or because they left before reaching the
minimum contribution that the pension system in the country of destination require or for some limit in
the portability of the pension rights or because they are still young and at the moment and they are net
fiscal contributor. This imply that it is only a mis-functioning of the pension system and a temporary
phase,because if we take off pension, migrants are over represented also in the contributory benefits.
When, instead, we control for the family characteristics, namely the migrants are compared to a native
with the same characteristics (the same eligibility to the welfare benefits), namely with the same level of
education, occupation, income, and number of children, in general their use the welfare state is smaller
than the natives ones or they are more able to exist from the take on benefits etc.
In this field the research is nationally based but both in Germany and in Sweden for instance dropping out
of the labour market is a much stronger predictor of welfare receipt among the immigrants than among
natives. In addition they assimilate out of the welfare state – namely the longer they stay in the welfare and
in the destination country the less they use the welfare - as the natives but at a lower pace. Thus the more
effective policies should be policies which reduce the entrance into the welfare more than policies which
favour the exit from it.
In Sweden refugees exhibit a greater degree of state dependence while labour migrants are much more
similar to natives.
A more recent line of research stresses the importance of the social value spread in the origin community
and consider as multiplying factor the attitude of the foreign community versus the integration which can
condition the individual behavior in a positive or in a negative direction.
Even if some evidences - controlling for the migrant characteristics -are in favour of a smaller use by the
migrants of the social programs, in many debate, this is not enough to reduce the impact of a larger
average cost for the foreigner populations. The question remains, who pays for their larger use of the
welfare? Who benefits of them? While in a labour market analyses it is easy to understand who are the
winner and the looser, in this case many advantages are inter-temporal given that the higher cost now for
the support of families with a large number of children will be beneficial in the future. The benefit will be
relevant, however, only if the families are well integrated, namely, if their children attend school, find a
good job, pay the taxes and use the welfare less than the parents.
Social Integration: introduction
Social integration is frequently considered a second step in the migrant integration process. The two
components are not always going together, you can have economic integration without social integration
but there cases are limited, so let us concentrated on the many who are deprived of both.
Social integration is a two fold issues: on the one hand is determined by the ability of the individual and of
the migrants family to interact with the society of the destination country, but on the other hand it is
determined by the attitude versus the foreigners of the population in the destination area.
The economic approach to social integration measures it as for instance by the frequency (the number)
and the quality of contacts that the foreign has with the native population. The empirical research points
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out that the higher is the level of education, the more likely and complete the social integration is. Even
when they live in a close community, they keep contacts and invite and are invited by local friends.
The duration of stay in the destination countries not always act as a push to social integration especially, if
the level of education or knowledge of the language spoken in the destination country is not high. In some
communities the seniority of the migration has secluded the migrants from the origin and the destination
countries. The children attending school are an important mean to canalize contacts with the social values
of destination countries which, however, frequently conflicts with the value of the communities of origin.
The policies adopted to favour the social integration of the foreigners try to create opportunities of
contacts different from the already established ones with the intermediation of the civic society but the
success of these policies need also the participation of the local population .
The polls which tackle the citizen concern about immigration provide a different picture from the one
reported in the newspapers (Fetzer J., 2011 The Evolution of Public attitudes toward Immigration in Europe
and the United States, 2000-2010, Transatlantic Programme, Research Report, Policy Brief: EU-USA
Immigration Systems 2011/10). The Eurobarometer poll from 2003 to 2010 does not show a change in the
concern over “immigration issues” and in general only a stable and small share of the population (2-18%)
consider it one of the most important problem for the EU15 destination countries.
As well, according to the European Social Survey (2002-08) the opposition to immigration from the “Poorer
Countries Outside Europe” is on average for the EU15 countries about 15% and the double only for
Portugal and Greece and has not increased during the period. The World Value Survey (1999-2007) shows a
concern about limiting immigration among 40% of the sample and it is increasing only in Spain, but just
because the initial value was very low. Also the Transatlantic Trends Immigration provide interesting
insights on European citizens’ perception in line with the poll mentioned above but as well the new
accession countries are missing. There is, however, in this survey a very interesting question for the present
debate about the Government intervention in easing assimilation of foreigners.
Fig.3B (based on TTI 2010, Table Q17 – only 2010 data): “Thinking about the steps that have been taken to
integrate immigrants, would you say that the government has been doing a very good job, a good job, a
poor job, or a very poor job?”.
78
80
66
70
57
60
63
56
51
50
43
38
40
31
30
20
29
26
Very good/good job
Very poor/poor job
19
10
0
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And as can be seen by figure 3 there is a general agreement in new and old immigration countries that
what has been done until now is not sufficient.
The debate on the newspaper is, however, very hot, because the political parties use the migration issue
as a ram to attach the prevailing social values and abuse of the sensitivity of the public to security issues.
During the electoral campaign the integration of the migrants is always in the agenda.
How to address these challenges?
Is the migration policy or the social policies which should deal with integration of immigrants?
The migration policy can be broadly divided into policies focused on the entrance in the country and
policies which deals with the staying and existing from the county.
A simplistic answer would say that the first integration is the migration policy, namely the selection at
entrance of the immigrants who are more likely to integrate, who will not over-use the welfare state and
who will over perform the native etc. An example could be the selection by specific visas or point system
applied in USA, Canada, Australia and New Zealand which follows this idea. They try to select migrants
giving a larger weight to the knowledge of the language of the destination country, the level of education,
the skill in demand, the capital at disposal etc. All factors which favour the economic integration. A more
generous approach to the family reunion policy in the United States – which is extended to brothers and
sisters - and an earlier implementation seems one of the causes of the lower performance of immigrants in
the USA versus Canada and Australia because through this channel potential workers not in the demand
were entering the destination labour market.
We do not want to enter the debate, if selectivity is against the human right of mobility, we just take the
example of skill selectivity. In the battle for talent USA, Canada and Australia are for sure the net gainer.
Also highly skilled European workers use this opportunity but not all of them find a highly skilled job. The
entrance by the high skill door, if it favours the entrance, does not grant always a high skill job, especially if
the high skilled education is not undertaken in the country of destination.
This is just to say that if the selective entrance policies are probably able to select people who relays less
on the welfare state, it is not able to reduce the under assimilation (because the comparison with a
similar native show a lower wage profile) and a large brain waste persist. In addition in Europe with the
exception of UK the immigrants are mainly in low and medium skill job, thus if the selection follows the
skills in demand, it will include also unskilled workers who are more likely to be welfare eligible.
How can manage the issue countries which need unskilled labour who are the ones more at risk of welfare
use or dependency. Probably it is not the low skill level which make the migrants more eligible to the
welfare benefits but the irregular labour demand which push them more on the welfare state.
Migration policies which norm the entrance in a country are frequently distorting the decision of staying
transforming a temporary flow into a permanent one. A important example is the restrictive immigration
policy adopted by the North European countries Germany, Belgium, France in 1973 which transformed a
migratory phenomena with frequent return home into a settle one. The difficulties met by the migrants in
re-entering the destination countries was forcing a reduction of return home and little by little has
transformed a temporary into a permanent migration. It was good or bad? It was not intended.
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Countries of origin and countries of destination need two types of migrants both temporary and
permanent. We, already, showed that Europe needs permanent migrants, but it also needs temporary
migrants for temporary jobs, let us say seasonal jobs, short term contracts, women working for families for
few years. On the other side, also the country of origin with an excess supply of labour force and
population, needs permanent migrants to solve the excess of pressure upon the natural resources but also
temporary migrants who earns income abroad but use their human capital in their country of origin. And
thus a migration policy which disincentives temporary migration by imposing long stay to grant a permit
which allows the freedom of return, and policies which force the integration by linguistic course at arrival
etc. force the transformation of temporary flows into permanent and are not optima.
The migration process is difficult to manage because migrants are human being who change mind on the
way, thus the more effective approach is an integration which start in (and possibly in cooperation with)
the sending country. There is a given amount of information about the life, the work, the regulations, the
value of the society in the destination which are important both for temporary and permanent migrants
and this first stage for the integration should be under-taken before departure, and organized by
efficient public or ONG in the country of origin.
The second stage of the integration policy has to take place in the destination countries. There is not an
unique receipt, because it varies according to the country of destination, the type of migrant, age etc. but
it should be sequential process with a no compulsory initial phase to avoid the distortion of the individual
decision but open to public intervention if difficulties erase.
A minimum level of integration is needed also by the temporary migrants and it is not surprising that many
temporary migrants are foreigners who have the right to remain in the destination countries, they know
well the language, the legal system, but instead prefer to stay only for short periods. Being a temporary
migrant does not imply by definition lower human capital or low skills, even if the jobs in which they are
employed are not skilled or highly paid.
In addition the integration policies and intervention should be calibrated to the seniority of the migrant in
the destination country and his intention to stay (even if we know that intention are only intention). Is
second generation of migrants in need of integration policies or they should be considered simply as the
other citizen and tacked by social policies if they are in need? If the roots of the limited integration are in
the migration history and background, special social policies named integration policies should be
implemented.
The intervention should be diversified but some common line of development can be designed. It has to
insist upon the knowledge of the language of the destination country and its way living. Without
knowledge there is no acceptance and no participation. The multiculturalism model is no more the point of
reference o f integration debate and a more tolerant but self-confident in the social and cultural model of
the country of destination is adopted. The countries of destination has to impose some minimum
requirement, they give rights in exchange of duties, but they have also to accept diversities, and this last
require also an adaptation of the citizens to accept different social values.
The European Commission has already traced a route with the two antidiscrimination Directives introduced
in 2000 Race Equality Directive and Equal Treatment Directive and extended in 2003 to Third Country
Nationals to supported the Member State’ Governments in the recognition of the rights of migrants. It has
also prepared an Integration handbook, funded projects to measure the integration as MIPEX and funded
additional instruments for integration projects. This creates a common field of rights of the already
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accepted migrants which need to be complemented by a coordinated guidelines for the access into the
member states.
The large bulk of work is, in fact, on the shoulder of the member state which should tackle the issue with ad
hoc policies which should differentiate according to the specificity of the migrants community but which
should remember that solving first generation migrants integration is less costly that tackling with second
and third generation migrants problems.
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Fetzer J., 2011 The Evolution of Public attitudes toward Immigration in Europe and the United States, 20002010, Transatlantic Programme, Research Report, Policy Brief: EU-USA Immigration Systems 2011/10
Geddes A., Boswell C., 2011, Migration and Mobility in the European Union, Palgrave Mcmillan,
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