What makes you think about immigration

"I see the chance that Germany will change positively under the pressure of immigration"

PWP: Professor Dustmann, the mass influx of people in Europe has been keeping us in suspense for months. Has something like this happened before?

Dustmann: After all, Germany already experienced a strong immigration of ethnic German repatriates after reunification, especially from the areas of the former Soviet Union and the Eastern Bloc, as was the case in the early 2000s, and there was also a correspondingly heated public discussion at that time. Even then, the numbers were in the millions; however, the challenge is certainly greater this time. Incidentally, within immigration or migration, one must clearly distinguish between voluntary immigration and forced flight. So far, economic research has not been able to say much about pure refugee flows. By definition, the decision to flee is not an economic decision either. Instead, people are mostly concerned with bare survival against the background of war, religious persecution or natural disasters. In the case of voluntary immigration, on the other hand, economic considerations are actually in the foreground, and this is what we, as economists, are most interested in.

PWP:Can it be so clearly distinguished, apart from the fact that we currently do not even know how many of the newcomers can actually be classified as “real” refugees according to this definition? Those who flee from danger are certainly also making an economic calculation in the background, not least with a view to where they are going.

Dustmann: Sure, in reality they are related, but conceptually it is extremely helpful to clearly distinguish between them. Incidentally, we had very good experiences with economically motivated migration in Germany with the “guest workers” in the 1950s and 1960s. You have been served and so have us. And as far as the pure flow of refugees is concerned, we must by no means forget the huge influx from the former German eastern territories that Germany had to deal with after the Second World War.

PWP: Naturally, the absorption capacity of the destroyed country could not be the best at that time.

Dustmann: At that time, the Potsdam Agreement affected up to 15 million people who had to relocate to the four zones of occupation. Not all of them survived the exertions. All in all, that was a considerable migration.

PWP: The admission rate in the Soviet occupation zone, the later GDR, was the highest at just under 25 percent. Can this experience make us optimistic that we will be able to cope with the strong influx again now?

Dustmann: We still don't know enough about the migrants to be able to make a clear statement. We are only observing the current high level of immigration over a very short period for scientific purposes. Much will depend on how the situation develops, especially in Syria. With immigration from the Balkans in the 1990s, we saw that many of these refugees left Germany again after the situation had calmed down. How easily the people who come to us can be integrated will also play a role. When the late repatriates came back then, most of them brought the German language and German cultural assets with them. It is different with the people who seek refuge with us today. You come from other cultures and have language barriers. There is a lot of work to be done.

PWP: Syria is not the only state from which people are fleeing and emigrating at the moment. People come from Iraq, Afghanistan, Pakistan and North Africa, among others.

Dustmann: Yes, and that is why we need very clear guidelines as to who is to be recognized as an asylum seeker, and we need a political strategy on how the borders of the Schengen area are to be secured. A very strong free rider movement has developed. Many people try to come to Northern Europe who cannot be qualified as refugees according to the Dublin Convention. You have to make a clear distinction; this is very important in the current tense situation. And we are already seeing corresponding political efforts.

PWP: You just mentioned different cultures. Will it not be much more difficult with the large number of immigrants, especially from Muslim countries?

Dustmann: Yes, of course it's a challenge. But I also see this as an opportunity.

PWP: Nice - but to what extent?

Dustmann: I see the chance that Germany will change in a positive way and that the citizens will learn to deal well with people from very different cultures and to integrate them accordingly. This essentially presupposes that the institutions and processes are reformed, that they become better, leaner and more efficient. In Germany we are nowhere near as advanced as the classic immigration countries such as the United States and Canada. Great Britain, where I live, is also there. If Germany succeeds in catching up significantly under the enormous current pressure, we will be better prepared for the 21st century and also better able to benefit economically from immigration. Because the future will definitely be characterized by massive migration flows. The world has become a village. It is better to prepare and adjust for it.

PWP: Are you worried whether Germany can "make it"?

Dustmann: In Germany the situation could not be more favorable at the moment. On the one hand we have an excellent economic situation, we have growth, industrial production has developed very well, exports are strong, we recently closed the public budget with a surplus, and on the other hand the population is aging. The foreseeable shortage of labor is already causing the economy considerable concern. This means that we can absorb a wave of migration much better today and integrate people into the labor market faster than we did in the 1990s, when the economy stagnated.

PWP: What does research say about the economic effects of migration, for example on the labor market?

Dustmann: The effects on the labor market depend to a large extent on which qualifications the immigrants bring with them, at which point on the labor market they compete with locals, whether and how they fill existing bottlenecks, how long they want to stay and how long they actually stay in the end. How strongly the migrant integrates into the labor market and into the social system and whether he learns the language depends on whether he wants to stay permanently. As far as the intentions to stay are concerned, we don't know much about the current wave of migrants so far. But we have some lessons from previous waves of migration. Today migration is mostly temporary, less often permanent.

PWP: Is that your experience in the UK?

Dustman: Here we see that very many immigrants emigrate again. After five years there are only about 60 percent of those who came here. It's similar elsewhere. A decision to migrate is not always a decision for the whole life, but mostly only for a phase of life. Together with colleagues, I have tried in a series of essays to dynamically understand the life cycle decisions of migrants in a scenario in which the migration decision is not permanent, but only temporary[1].

PWP: How is the connection?

Dustman: Someone who only wants to stay temporarily, for example two years, usually does not try so hard to invest in human capital that is specific to the host country, for example by learning the language there. But he will work hard to make as much money as possible. However, if you want to stay for 20 years or even completely, you would do well to improve your earning potential by learning the language.

PWP: Sounds logical. What does that tell us for our current case?

Dustmann: First of all, it is important to note that the current refugee migration is largely a matter of people who have decided to flee because of the danger in their home country. It can be assumed that many of these people will return once the situation in Syria has stabilized - similar to the case of the Balkan refugees in the early 1990s. We still know far too little about the training structure of the people who have recently come to Germany, and even less about the training structure of the people who also have the prospect of being granted asylum. It is far too early to make a reasonably reliable statement as to whether the new entrants will encounter a supply gap on the labor market or whether they will have displacement effects. One lesson that can be learned from the long-term efforts of other European countries in connection with previous refugee flows is, of course, that it is very important to get people onto the job market as quickly as possible. The social integration effect of the labor market is unsurpassed. The authorities must therefore decide on asylum applications as quickly as possible, and one should not waste too much time on further training and retraining (“skill upgrading”). People have to get jobs quickly and can then gain further qualifications once they are integrated into the job market.

PWP: To do this, they certainly have to be a little flexible themselves.

Dustmann: Certainly. As different and not very comparable as the cases are, it has been observed in all migration movements that the immigrants initially work in positions whose requirement profile is below their actual professional qualification. It's always like that because there is a lack of complementary skills, such as language. The legendary Syrian surgeon will certainly not be able to work as a surgeon in a German hospital as long as he does not speak the language. It takes time. And that is why it is also a typical pattern that the first generation of immigrants in their new homeland usually have a harder time than their descendants. Their cultural assimilation is then usually much better, and that increases their chances on the job market. However, it is important to integrate the surgeon into the labor market immediately - even if it is initially only as a nurse. He can then further qualify on the side.

PWP: The economy is then certainly in demand.

Dustmann: Correct. The economy will be interested in all immigrants that it can bring productively into its processes. But let's not kid ourselves, there will also be people for whom this is difficult. And that's where we have to provide assistance.

PWP: What about the locals? Especially in the low-wage sector, people in Germany seem to be afraid of being displaced by migrants.

Dustman: The impact of migration on wages in the host country is not easy to grasp. What can be observed are wages after migration has taken place. One wants to compare that with the wages as they would be if migration had not taken place. However, this is counterfactual evidence that cannot be observed. Simulating this is not a trivial matter, and without some pretty strong assumptions it won't work. One can, for example, take advantage of the variation in migration movements to different regions. If different numbers of migrants pour into Bavaria and the rest of Germany, then the different wage developments in these regions can be put in relation to this. However, this is based on the strong assumption that the migrants are distributed across the various regions purely by chance.

PWP: And what if you go to Bavaria precisely because you expect better economic development there?

Dustmann: Then the parameter that one estimates is not causal. One must therefore try to predict migration to the various regions using factors that have nothing to do with economic development. If there were many Italians in Bavaria 20 years ago, then it may be advantageous for Italians today to go there as well, because they have networks there - but this is usually not correlated with today's economic development. One can also take advantage of the fact that migrants, for example with the influx of ethnic German repatriates, have been distributed to different circles according to certain codes. In the case of the repatriates, the settlement pattern at that time was not correlated with economic factors. One of my former students took advantage of this to identify the effect of this migration on wages.[2] Germany opened the German-Czech border to Czech commuters in the early 1990s. They were allowed to work in some districts near the border, but had to stay at home. Technically speaking, this setting made it possible to determine the causal influence of this commuter migration on wages and employment of the locals, because one could compare the circles in which Czechs were allowed to work with circles in which they were not allowed. In addition, one could relate the variation in the districts in which they were allowed to work to the distance from the German-Czech border.

PWP: And what was the result?

Dustmann: There are only relatively small wage effects, but quite large employment effects. That has to do with the fact that these are people who only go to Germany to work, but do not spend any money there. And the employment effects are not essentially caused by those domestic workers who lose their jobs, but mainly indirectly by those who, because of the competition from the Czechs, cannot find their way out of their already existing non-employment, or those who do not move from less affected regions to more affected regions commute.

PWP: Is it possible to say empirically whether a minimum wage, like the one Germany has had since last year, makes it more difficult for immigrants to integrate into the labor market and exacerbates any displacement effects vis-à-vis locals, and if so, to what extent?

Dustmann: So far, there has been very little research on the relationship between migration and the minimum wage. Of course, it always depends on how high the minimum wage is and whether there are exceptions, especially for younger people who are less productive than older people due to a lack of experience. If the minimum wage is set reasonably modest and appropriate exemptions are provided, it need not have any major crowding-out effects. Whether and how the introduction of the minimum wage will affect employment in Germany, and especially migrants, is something we are looking at right now.

PWP: But a few years ago, on behalf of the UK Low Pay Commission, you investigated how migration affects wages near the minimum wage.

Dustmann: Yes, and that was a challenge because there was no methodology for it. In the course of this study, we found that migrants are not to be found in the labor market where one would expect them to be based on their education and experience. The Polish migrant with a university degree and 10 years of work experience, for example, is not to be found where one would look for Englishmen with the same background, but further down the wage scale. This “downgrading” is extremely problematic for a large part of the methodology used in migration economics, which assumes that migrants can be grouped into appropriate categories on the basis of characteristics such as educational qualifications and professional experience. Thats not OK.[3]

PWP: And then?

Dustmann: We looked at where migrants stand in the wage distribution. Above all, they are in competition with local residents where their observed wages match those of local residents. We then developed a method that allows us to estimate the impact of migration along the entire wage distribution[4]. This influence is slightly negative where the population of migrants is very dense. This comes about through substitution, i.e. when migrants displace locals in low-wage jobs. On the other hand, at the upper end of the wage scale, the influence of migration is slightly positive, which can be explained by complementarity.

PWP: Were you able to differentiate between different migrant groups and origins? Are there studies that can be used to make a statement as to whether there is anything to the classic clichés such as “the Chinese are hardworking, the Arabs less”?

Dustmann: We don't do that in this work. One could analyze that in principle, but such a division requires further strong assumptions, which we were not prepared to make.In general, one always has to be very careful when making statements on such politically sensitive issues. One has to be aware of the enormous explosiveness of this topic in public; there is often a lot of misunderstanding and abuse. You have to take this risk of misinterpretation into account and adapt to it.

PWP: How do you do that

Dustmann: We are very careful and cautious about what we bring into the media and into public discussion and what language we use. In England in particular, the media are extremely aggressive. We have already gained some experience, for example with our study on the impact of migration on public budgets. The question was whether the migrants who have come to England since 2000 have paid more into the public purse in the form of taxes than they have been paid in the form of transfers. That was of course extremely explosive because British Prime Minister David Cameron made transfer pay reform a key issue in his negotiations with the European Union.

PWP: And what does the study come out of?

Dustman: The balance is clearly positive. Not everyone wanted to hear that, though. In Germany, one can hardly imagine the enormous pressure from politics, interest groups and the media we were under with this study. We were therefore very careful with the assumptions and scenarios in our analysis, and we made the study completely transparent.[5] Nevertheless, there were a number of very unpleasant comments. That is precisely why you always have to be very careful whether and with what you hang yourself out of the window politically.

PWP: In Germany, especially in the east, people who are dependent on state transfers seem to be afraid of the refugees. They fear that the refugees will cost so much money that they will eventually run out of money. Is this concern justified?

Dustmann: No, I think that's absurd. I cannot imagine that the flow of refugees would put us in an economic situation in which we would actually be forced to finance the costs of caring for asylum seekers by cutting social benefits. Especially since the German public finances are in good shape. Of course, caring for the many refugees not only costs strength, but also money. But the question is what the alternative is. If we are to give refuge to people fleeing war and persecution, it is clear that we must also deal with the costs. Whereby it doesn't have to be that high if we succeed in getting people onto the job market quickly. Once they have a job, they can pay for their own living, pay taxes and social security contributions, and even support our strained social security systems.

PWP: If the influx of refugees continues like this for a long time, one will have to think about financing at some point. Then what would you advise?

Dustmann: I don't see any need for such a discussion at all at the moment. It is much more important to think specifically about how the burdens from the refugee crisis are to be distributed across the various European countries. Not only Germany signed the Dublin Agreement at the time; All other signatory states are also obliged to contribute to the costs. If Germany is the country that takes in the most refugees, then it is also appropriate to think about financial compensation for it.

PWP: The economically weak EU countries such as Greece, where the refugees first enter the Schengen area, are currently in the greatest need.

Dustmann: Yes, Greece and Italy too. But that's nothing new. These countries have been in a very difficult situation for at least ten years because of the refugees who land with them. You are overwhelmed with the task of protecting the external borders of the Schengen area. It was a great negligence on the part of the northern European countries, including Germany, not to have adequately appreciated this situation and given the necessary support for many years. One is only now really talking about this problem under the pressure of the events in the north, but the necessary structures should have been created much earlier.

PWP: Some people fear that with more and more Muslim immigrants we will only draw on other parallel societies that will eventually evade German law. How do you rate the experience with it in England?

Dustmann: In England there is a very high proportion of Muslims whose families came a few generations ago. In my opinion, the integration actually worked very well here. Of course there is some social segregation. But we also see segregation in other societies, where the wealthy live in different areas than the poorer - in the United States, for example, where ghettos occur. These social structures are not only determined by the origin and religion of the people, but also essentially by their economic status. Above all, it is important to give members of minorities the opportunity and incentive to integrate into all parts of society. And as I said, Germany has some catching up to do.

PWP: And currently it is simply reaching its capacity limit.

Dustmann: For this reason, too, immigration countries must have the right to regulate and control who exactly is allowed in and who has to stay outside. The clear demarcation of economically motivated immigrants from refugees who can no longer live in their homeland is particularly important in the current situation and, from a legal point of view, quite clear. And that's just as well. A policy of open borders is definitely not a good policy.

PWP: Why?

Dustman: Because a lot is expected of the local population with such large migration movements. People are afraid of everything strange, especially new, of change. A responsible migration policy must therefore take into account the fears and worries of its own citizens and weigh them against the purely economic benefits and the purely economic costs associated with immigration. There is a risk that too much immigration will escalate xenophobia in the country, that the citizens will become radicalized, and that would ultimately lead to the borders being closed completely - which does not help anyone.

PWP: The willingness to accept refugees is very unevenly distributed in the EU member states.

Dustmann: Yeah yeah Immigration is always a tricky story, much more difficult than any other issue that the European Union has had to grapple with up to now. The experiences that the different countries have had with migration are not the same, and emotions can easily boil among the population. The fact that we see a lot of sympathy for the refugees in Germany also has something to do with the memory of flight and displacement in our own country. The older generation in Germany in particular still has a lot of understanding.

PWP: There is a political shift to the right across Europe, which seems to have something to do with migration and the fear of Muslims. Can you confirm that empirically? And where will that take us?

Dustmann: My colleague Ian Preston and I started looking at these issues around 15 years ago. What actually influences the way people think about immigration policy - that was our question. Of course, one can develop simple economic models in which migration leads to winners and losers; the losers are then often to be found at the lower end of the labor market, especially if the migrants are rather uneducated. In the first analyzes, the scientists came to the conclusion that these models are also reflected in the formation of opinions. Uneducated people very often have a rather negative attitude towards more immigration, while educated people are more open.

PWP: But that wasn't plausible to you?

Dustmann: No, we never believed it in this flat form; that's too easy. We have tried to see the spectrum of opinion on migration policy in a somewhat more complex way. In 2001 we developed a module for the European Social Survey, which was then in the field in 2002 in 24 European countries. This asked the participants 60 questions about their attitudes towards all possible aspects of migration. On this basis, it became possible for us to formulate a model in which people's attitudes towards migration depend on two factors, firstly on an economic factor (the expected impact of migration on wages, social benefits, etc.) and secondly on one softer non-economic factor (fear of alienation, appreciation of social homogeneity, desire for a uniform religion and language, etc.)[6]. It has been shown that non-economic considerations have the largest share; these are three to five times more important than economic considerations. A similar pattern emerges if one asks the same question with regard to refugee policy in the narrower sense. We will publish these results soon. The fact that less educated people are less open to immigrants and refugees is not the case per se, but has to do with the fact that these less educated people place more value on a familiar, homogeneous social environment. They are more afraid of the strange and unpredictable than educated people.

PWP: For politics, this brings with it the lesson that you have to think very carefully about how to communicate immigration policy. And that it's important to address concerns.

Dustman: Definitely. The public discussion is extremely volatile. When the body of the little Syrian boy washed up on the Turkish beach and the picture went around the world, it triggered a wave of compassion. At that time I was worried that it would only last until the first rape occurs. Neither has much to do with the actual topic, but public opinion can be very strongly influenced by something like that.

PWP: Especially since in the age of Facebook, Twitter and Instagram everything is shared unchecked and unexplained millions of times, so that rumors and opinions are spreading explosively. By the time something has been properly researched and possibly refuted - like the false news about the dead refugee or the allegedly raped thirteen-year-old in Berlin at the time - opinions have often already solidified and are difficult to correct again.

Dustman: This is also something we are working on right now - how opinions are formed. It is indeed a very important issue. Another question that interests us at the moment concerns the influence of migration flows on the election results. This can be approached analytically by checking whether the difference between the election results in different regions of a country that are affected to different degrees by migration can be essentially attributed to them. The analytical problem here is that immigrants choose themselves where to go, and that they are almost certainly not going to areas where there is already a particularly xenophobic atmosphere. To isolate a causality, we take advantage of the fact that in Denmark in the 1990s migrants were randomly assigned to different municipalities and look at how the election results differ there. It turns out that there is a considerable shift to the right across the political spectrum. However, it also shows that the extent of the shift to the right depends to a large extent on how well or how poorly existing immigrant populations are integrated into the local labor market and not on the welfare system. This certainly has important consequences for politics.

PWP: It would not be surprising if there is a high density of migrants, and if there is a high level of rejection, the right-wing parties also see gains. But it is often the case that it is precisely there that people are most afraid of immigration and refugees and turn to right-wing populists where there are the fewest foreigners, where the communities are therefore most homogeneous.

Dustman: Yes, both are possible. UKIP, for example, has hardly achieved any significant votes in the most recent general election in London, even though almost 50 percent of the population here were born in another country (and generally do not vote). We are still trying to find out what exactly the dominant factors are.

Karen Horn, lecturer in the history of economic ideas and journalist in Zurich, spoke to Christian Dustmann. Christian Dustmann was photographed by Micha Theiner, Karen Horn by Beatríz Barragán.

To person

Not in the ivory tower

Christian Dustmann

Christian Dustmann, born in Bünde, Westphalia, is head of the CReAM (Center for Research and Analysis of Migration) at University College in London. The topic of migration was, as it were, born in his cradle: The Dustmanns have been based in Bünde since the 15th century, the center of a cluster that still exists today, but in the middle of the 19th century a number of them emigrated to America. Christian Dustmann himself practiced the balancing act between home and abroad for many years before he became a migrant himself and moved to England.

Christian Dustmann's studies at the local University of Bielefeld, which led him to the Venia legendi for economics and econometrics in 1997, was interrupted by two longer stays abroad: a master's program in economics at the University of Georgia, the oldest state university in the United States, and the doctoral program at the European University Institute in Florence, an international scientific organization founded in 1972 that is now supported by 21 member states of the European Union. While working on his habilitation thesis, he taught for a year in Bielefeld and then moved to London at University College, first as a lecturer and reader and then, since 2004, as professor and founding director of CReAM.

Why Dustmann did not stay in Germany is self-explanatory when one reads his article in the Handelsblatt of May 4, 2009 on the “economic controversy”, which was sparked at the time by the reorientation of the former economic policy chairs at Cologne University. In it, he accused German economics of having "not or hardly adopted" the new approaches in empirically oriented economic research. Above all, this "ossification of the teaching content" has led to a "strong departure of talented young German economists who are now completing their training and career with modern teaching content in the Anglo-Saxon region" - by which he certainly meant himself.

The requested modernization does not mean a relinquishment of a reference to reality or an indirect regulatory effect. “All of my research

work is always shaped by current economic policy issues, ”Dustmann emphasizes in the PWP conversation,“ I don't work in an ivory tower ”. As he wrote in the Handelsblatt, modern empirical economic research provides “a theory-bound and theory-motivated analysis of economic processes and institutions relevant to public discussion, with the aim of deriving scientifically sound recommendations to economic policy decision-makers”.

Dustmann is also drawn to travel from London again and again; He has held several visiting professorships at the European University Institute in Florence, at the University of Bonn, at the University of California at Berkeley, at the Australian National University in Canberra, at the University of Amsterdam and at Harvard. He is President of the European Society for Labor Economists (EALE). Against the current background, his research topic migration has made him a much sought-after discussion partner in the media, although he is careful not to lean too much out of the window. In England, where the media are "extremely aggressive", regulatory restraint is required. As soon as you are placed in a certain political camp, you are burned for public debate and achieve nothing. "At CReAM, we only strive to ensure that our research is recognized as independent and impartial and that we maintain the highest possible reputation with other scientists."

Beyond the topic of migration, Dustmann does research in various other areas of applied microeconomics such as family economics and educational economics, and deals with questions of wage development, mobility and crime. As a research strategy, it is extremely important not to get bogged down with topics that will once become very topical but “will not be of interest to anyone tomorrow”.You have to work on sustainable questions, because good academic research takes a lot of time and doesn't allow quick decisions.

Sustainable questions like this arise in any case about migration - "an incredibly broad topic that concerns everyone". Dustmann systematizes the field in which he researches by distinguishing between three major subject areas. First of all, it is about the migrants themselves: why do they decide to leave their country; where are they drawn to; what careers do they have in the countries they immigrated to; how long do you stay? And how does the decision on how long to stay relate to whether and how much they invest in their human capital, in the language, in their careers?

A second thematic block is to find out what is changing in countries from which people migrate and in those that are becoming refugees. How does migration affect the labor market, employment, wage developments, property prices, crime, innovation and competitiveness in the country? If there is a “brain drain” in the emigration countries; what does the money that migrants send home do?

After Dustmann, “Strongly Coming” is the third topic that he is researching: the interaction between migrants and those staying in the countries of origin as well as the countries of immigration. What does social integration depend on, how does public discussion and opinion develop under the influence of immigration, when does voter behavior become radicalized, what do citizens' attitudes towards migration policy depend on? Do the majority of people let themselves be guided by economic considerations, for example by the fact that immigrants compete with them on the labor market, or do intangible factors play a role, alienation, fear of the new and the other? Dustmann has shown together with Ian Preston that the rational reasons actually play a rather minor role[7] - and thus confirms an impression that is currently being imposed in the public debate. (orn.)

Published online: 2016-4-9
In print: 2016-4-1

© 2016 Walter de Gruyter GmbH, Berlin / Boston