Why a Rise in Migration Doesn’t Affect the Unemployment Rate

SANTIAGO – President Sebastián Piñera and Finance Minister Felipe Llaraín both pointed at the migration numbers in Chile when explaining the high unemployment rates in the country. Blaming migrants for disappointing economic results is popular among right-wing politicians but is often misplaced. A fact-check shows that migration doesn’t affect the unemployment rate at all.

According to the latest results from the National Employment Survey (ENE), the unemployment rate in Chile in the quarter April – June was 7.1%. Finance minister Felipe Llaraín and President Sebastián Piñera both explained these numbers as a result of the increase in migration.

In a television interview, the president said: “In the last four or five years, as a result of immigration, the workforce in Chile increased by one million people. That means that the requirement to create jobs is much higher.”

In a century marked by increasing migration flows, these explanations do well for conservative presidents who oppose migration. But when looking at the facts, it becomes clear that neither in Chile nor in other countries do these arguments hold water. Investigations of other developed economies that have seen their share of migration show that migration doesn’t negatively affect their unemployment rate. Instead, just the opposite.

Chilean Data

When looking at the unemployment rates of the last years, it becomes clear that the current unemployment rate of 7.1% is not exceptionally high for Chile. Over the last two years, the unemployment rate topped the 7% in at least five quarters, according to data from Trading Economics.

Moreover, when looking at the last ten years, we see that the unemployment rate in Chile has almost always hovered between 6% and 8%. If migration caused an increase in unemployment, we would have seen rising unemployment rates during the last five years.

The unemployment rate in the last ten years

United States

Another country, built upon migration and seeing again large numbers of migrants coming in, is the United States. Just as Chile, the country is led by a businessman that often points at migration when economic numbers fall behind. And just as in Chile, that excuse is full of hot air.

In the U.S., during his first campaign for president, Donald Trump attracted voters by stating that “Decades of record immigration have produced lower wages and higher unemployment for our citizens.” An investigation from the CATO institute came to a different conclusion: “Immigrants are heralds of growth, not portents of economic disaster.”

The investigation monitored nearly two centuries of migration and compared it with unemployment rates in the country. As can be seen in the image below, according to the institute “the years with higher immigration do not coincide with the years with highest unemployment. In fact, the reverse is true. Unemployment is highest when immigration is lowest.

Immigration vs. Unemployment in the US (Source: CATO)

In fact, the CATO report emphasizes, “To be clear, immigrants are not causing the unemployment rate to move up or down. The economic literature on this point is quite unambiguous: immigrants cause essentially no effect on the unemployment rate one way or another. Rather, the causation is the other direction. Immigrants come during periods of economic growth when companies are hiring new workers, both immigrants and natives.”

Migrants in Chile: Easy Target, Perfect Stick

So why does the president blame migration for the disappointing migration numbers? Because it is an easy target. Conservative, right-wing sectors traditionally oppose migration and by blaming the migrants, Piñera’s followers will demand stricter migration policies and won’t point to the current administration for the failing economy.

Failing economic numbers have been met before by Chilean officials with explanations about external factors, such as the heavy rainfall that affected mining in the north, the Chilean opposition or the trade war between China and the U.S. The government will never say that they aim too high or won’t be able to fulfill electoral promises, especially as candidates for the next presidential campaigns are already warming up. Which means for hundreds of thousands of hardworking migrants, they are the perfect stick to beat the drum.

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