Nova workboard

a blog from young economists at Nova SBE

Is emigration beneficial?

 

There are several reasons that make people run away from their countries and begin new lives in other places. Wars, economic problems, political and religious motives are the main reasons for emigration around the world.  Those different reasons, have something in common, people wanting a better life. So in a certain way emigrants try to choose countries with economic prospects and social stability.

Recently, Portugal has suffered a huge outflow of people. In 2011, the outflow of individuals was about 43,998, more 373% than in 2002. This could be easily explained by current economic crisis related with political instability, few job opportunities, and deterioration of standard living, highlight unemployment rate that lately achieved 17%. For one side, this outflow relaxes the unemployment rate, because unemployed people emigrate. But by the other side, this could be a tremendous problem for Portugal in the future. If we look to the age of people that left the country we see in 2011 about 48% of individuals were between 20 and 39 years, this means our human capital is leaving the country, the pure labor force. This phenomenon could bring huge problems to Portugal in long run. First, the “brains” are running out of Portugal, the productivity goes down and there is nothing that we can do. Second, Portugal is investing in education and R&D and innovation, but doesn’t have the capacity to keep human capital in the country so investments became useless, it´s like a waste of resources.

Immigration has been one controversial subject due to social and economic impacts that this could cause in society. Immigration in Portugal has decreased during the last 5 years, the entrance of new residents in Portugal coming from abroad decreased from 2011 to 2012 around 15%. So why do foreigners choose our country? Are they contributing as expected? First, foreigners come to Portugal mainly to find new job opportunities but low criminality, language and culture are also important in their decision. Generally companies like to hire immigrants because of low wages, which increases their profit margin. In Portugal on average, real wages of immigrants are 100 euros lower than what would be expected for similar Portuguese workers. The low level of scholar achievement is one of the factors that contributes to the low wage policy; about 23.2% of immigrants have 4 years completed education and only 8.5% of immigrants have higher education. Other factor is the need of the immigrants to get a job. What I mean with this evidence is that immigrant workers come to Portugal to work where Portuguese dislike or don’t feel socially comfortable to work, and the immigrants have advantages because are competing with lower salaries and companies take advantage of it. But when these immigrants cannot find a job, government to avoid the risk of social exclusion and poverty tries to help them. We can say that immigrants are not a significance problem because usually they do what is expected, in what law and order are concerned. However nowadays the unemployment rate is so high that is very difficult to support even the Portuguese workers the further the foreigner’ ones.

Money remittances are another important factor to analyze. In the last two years the income transfers to Portugal from foreign countries has increased; in 2010 it raise to 2.403.899 thousand euros; in 2011 this value increased by 1.11% to 2.430.49 thousand euros and in 2012 the value raised roughly 13% to 2.749.461 thousand euros. This means that more people outside the borders transfer money to Portugal what is beneficial to the country. Available income increases consumer capacity and consequently increases larger demand for goods, giving boost to the economy.

Relatively to the transfers that are made from Portugal to other countries in 2010 the value of the transfer reached 585.626 thousand euros; in 2011 the amount increased around 3.22%. But in 2012 the difference was huge from 2011 to 2012 the change was -10.3%. The economic crisis, taxes rises, unemployment rate, the increase in living costs are factors that contribute to a lower outflow of capital. These kind of analysis could be a mischief, since a decrease in outflow of capital doesn’t mean necessarily a good thing, Portugal could be becoming a less attractive country, therefore less money getting out of the country.    

 

 

 

José Ribeiro          645

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Author: studentnovasbe

Master student in Nova Sbe

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