DESIRABLE OR NON-DESIRABLE

The issues consistently raised in the debate on migration policy ultimately focus on economic considerations: a "rnore favourable" population breakdown or a"rnore useful"

labour force or in other words, a more efficient economy. Aceording to the narrower eco-nomic interpretation of a country's "interests" , the aim of migration for the host country is to increase the prosperity of the native population and their share of the GDP.

Is foreign labour beneficial or harrnful to the Hungarian economy? Fortunately, we do knowalittie about trends and the regional breakdown of Hungarian migration.? However, almost nothing is known about which sectors of the economy employ aliens, whether for-eign labour plays an important role in the Hungarian economyor even the true signifi-cance of legal and illegallabour migration.

These uncertainties are reflected in the heated debates which characterise even those countries which can boast a substantial number of empirical analyses. The increase in migration both in Europe and the USA has led to debates over the beneficial and hmmfui effects of migration. Fears conceming migration are usualJy expressed as a question of whether foreigners take jobs from native workers and whether they cause a decline in wages. Another question is whether migrant workers can adapt to the host economy and whether they can co ver the costs of their own welfare services. These concems are not

cai reasons isfaccd with the decision ofwhere to go.The choice of possible destinations can, in agiven situa-tion, be influenced byan economic optimization behaviour. A. Zolberg (1989) has noted the important correla-tion between the Iimitacorrela-tions on en try (to labour markets) and the growth of demand for refugee status.

8This dilemma is reflected in the last paragraph of a recent analysis: "Similarly to other studies, this study too is faced with the problem that only the competition from legally employed foreigners could be studied.

However, poiiticai debates are generally concerned with the impact of the illegal employment of foreigners.

Does this not, in effect, mean that the above analysis loses its significance?", is the authors' conclusion in their study offering a detailed analysis on the imp act of legal immigrants on the Austrian labour market (based on statistics). A few sentences at the end of their study are devoted to illegal migration which might possibly dis-tort their mathematical and statistic calculations. ep. Winter-Ebmer and Zweimüller (1996), p.\02.

9For anoverview ofthe few modest empirical analyses, cp. Sik (1993) and Sik-Tóth (1994, 1996, 1997).

Aceording to Dövényi (1997) who worked with 1995 data, most mayors agreed that foreignérs settled in ali countics of Hungary, mostly in cities and larger towns, and that their settlement was concentrated in the central and eastern regions, as weil asBudapest. Aceording tothe data gathered bythe Central Statistics Of/ke(KSH, 1997) 35 per cent of foreigners staying in Hungary for over one year lived in Budapest. 4.9 per cent of the active workers aged 15-39 were foreigners.

unfounded and immigration does place a heavy burden on the host economy, as demon-strated by Borjas (1994).

On the macro-econornic level, the imp act on employment in host countries is barely perceptible. No correlation has been demonstrated between unemployment and the ratio of foreign labour in developed western economies.l? More detailed empirical studies have shown that employment opportunities and wage increases may be affected - to differing extents - in specific regions or other segments of the population. The insignificance of the impact of foreign migrants is generally explained by claiming that the high ratio of for-eigners in certain regions, in tum, triggers the migration of the native population and, thus, has an effect which ripples across the entire economy, and is thus difficult to meas-ure.!' Although the possible effects of migrant labour in Hungary have not been analysed yet, we do know that in Austria, where the ratio of foreign employment is considerably higher than in Hungary, few, if any, effects have been demonstrated, and they differ ac-cording to economic sector.!?

In contrast to the imminent or less critical dangers of migration, its possible benefits are - interestingly enough - rarely mentioned. In the study quoted above, Borjas (1995) convincingly demonstrates that the benefits of migration compensate its costs which originate from the not only the reciprocity of migration but other elements of production as weIl. He also claims that the greater the difference between the native and the migrant labour force, the more significant the effect of migration (through wages). Another benefit can also be seen in the redistribution of welfare services, primarily from the taxes paid by migrants to the services which are not used by them. In this respect, skilled migrants are more attractive and even if they are eligible for welfare benefits, their probable demand for these benefits is lower while, at the same time, their contributions are higher.P

Migration policies are generally designed to attract desirable migrants for the labour market and to exclude others. In order to influence migration, a set of selective criteria are generally formulated. At first glance, the main goal of a prudent migration policy is to attract valuable labour. How should we define "valuable"? Human capital investment in qualified labour undoubtedly appears as such, especially if we subscribe to the human capital theory underlying selection, aceording to which education, qualification and training make labour more valuable, and if we also accept the theory proposed by one renowned expert on the economics of migration that the average productivity of a host country is raised to a greater extent by skilled rather than unskilled workers.!" However,

10 Aceording to 1995 data, unemployment in Spain, ltaly and Ircland was high, and the ratio of foreign workers was low, whereas in Switzerland and Luxernbourg, low uncmployment was coupled with an outstand-ingly high ratio of foreign workers. A more or less similar unemployment level could be noted in Germany, Austria and Belgium, ali of which had higher ratios of foreign workers, and in Portugal, Holland and Sweden which had lower ratios offoreign workers.

IICp. Borjas (1994, 1995).

12 Cp. R. Winter-Ebnerr et al. (1996).

13 Hungarian regulatiens demand that foreigners residing in Hungary pay social security and labour market contributions, as weil as taxes, but instead of receiving unemployment or welfare benefits, they are barred from the welfare system and on ce they are unable to find employment, they are deported from the country. Howevcr, there are no data on the actual amount ofbenefits used. Cp. Tóth (1997).

14 Cp. Borjas (1995).

there is no sound argumentation that the average productivity of a mixed population is inde ed affected by qualification.P

Why is qualified labour necessarily more attractive? Labour supply needs to be screen-ed is some form. Selection based on gender, age and ethnic composition of migrants or their breakdown aceording to qualifications or other useful qualities may provide an ef-fective screening method, at least aceording to the proponents of the screen ing hypothe-SiS.16Some kind of selection criteria must be applied. A better educated, more qualified, young, and productive labourer will probably cause less problems, offer better perform-ance and adapt more readily - although he may not necessarily improve the performperform-ance of the host economy as a whole.

In contrast to the arguments based on the human capital theory, Stark (1991) has ar-gued that both human capital and the information available on it changes during migration which, incidentally, should not be analysed at aspecific moment, but within given period of time. Information is asymmetric: at first, the assumed qualification (its lack) is paid, and with time, the initial uncertainty over the migrant's qualifications and capabilities disappear, and the uniform wages pa id to migrants - or some of their groups - are differ-entiated, establishing a division providing a divide between migrants who continue to work in the host country and those who retum to their homeland. It is possible that more qualified labour will not be as desirable once higher wages are involved while unqualified labour may accept less than their earlier wages. Trends in migration and wages can be explained with this model.

Even if the host country accepts the migration of screened, qualified labour and is even prepared to offer incentives for their entry, principles which appear attractive on the macro-Ievel do not always appear on the micro-level. In spite of alI restrictions and efforts at channelling, migrants who do not conform to the preferences of su ch a selective migra-tion policy nonetheless leave their homeland, seeking - and finding - less qualified and unqualified jobs. Given the growing concem over jobs and wages in the host country, undesirable labour may find itself barred from legal employment opportunities. Similar to illegal native workers, unpaid taxes and other contributions of alien citizens will decrease revenue of the host country.

An immigration policy based on the human capital theory of more qualified and thus more valuable labour is not necessarily successful. This also holds true for Hungary. The ultimate goal - that migration should correspond to the country's interests - should be formulated in another manner.

15Cp. Layard et al. (1992).

16The screening hypothesis in fact addresscs the problem of whether qualification asmeasured by cduca-tional attainment can be used as an cffective screen ing method for evaluating the potential performance of applicants. It may offer useful information on the potential capabilities, the achieving motivation and family background of new workers. Most workers attain the necessary skills byon-the-job training and employcrs arc mainly concerned with selecting job applicants in terms of their future trainability. Aceording to Blaug (1976) if the above assumption is correct, the observed correlation between educational attainment and earnings -which figures prominently in the writings of human capital theorists - disguises a more fundamental correla-tion between educacorrela-tional attainment and trainability. Cp. Blaug (1976).