Benefits from immigration

Immigrants can have an adverse effect on job opportunities for natives as immigrants skillsets resemble those of native workers but immigration can contribute to a host countries income. This is a standard supply-demand analysis above, as wage falls unemployment increases. Suppose labour supply of native workers is S and the wage is W0. Assume labour supply is inelastic and so equilibrium is at the intersection at point B. National income is the area ABN0. Now there are large inflow of immigrants and the labour supply shifts to S’ and the new wage level is W1. National income increases to ACM0, and total wage paid to immigrants is FCMN. The increase in national income from immigrants is triangle BCF. This is immigration surplus.

Essentially the benefit to the host from immigration is greater than the wage paid to immigrants as the wage is lower for immigrants but productivity of immigrants is equal to productivity of natives. There are benefits to host only when the demand is inelastic and immigrants get paid less, otherwise is demand is perfectly elastic there are no gains