Net migration is falling in a number of developed economies

Immigration has been one of the most prominent political issues over the last few years. It has always been important, but with a world population increasingly on the move, its significance has grown. In response to this, politicians have attempted to tighten the rules that allow people to enter their country. The US President, Donald Trump, has made reducing immigration into the US a centrepiece of his government's objectives, and he is not alone; Canada, the UK, and EU countries are also trying to reduce immigration. 

Last year, net migration to several Western countries saw a sharp decline. In Britain, net migration fell by 50%, and Canada saw 60,000 people arriving in the last three months of 2024, compared to 420,000 at its peak two years ago. The most recent data from the United States showed a net migration decrease of 600,000, from 4 million in 2023. Meanwhile, New Zealand experienced an 80% decline in net migration by March 2025, compared to its peak in late 2023.

The economic arguments associated with reducing immigration centre on several key issues. An important one is the labour market, where some people believe that fewer migrant workers will decrease the supply of labour and increase wages. This is seen as important in low-wage, unskilled work, where large numbers of migrant workers push down wages in areas such as hospitality and retail. As migration has fallen significantly over the last year, there is no clear evidence yet that this has increased wages; in fact, wage increases have fallen, and most economies have seen an ‘uptick’ in unemployment. However, there are other factors influencing conditions in the labour market, such as slow economic growth.

It is argued that another benefit of reducing migration is that it reduces pressure on prices to rise in the housing market, both for owner occupation and the rental market. If fewer people are trying to buy or rent a house, then the decreased demand should decrease the price. There is no evidence of this yet, although the increase in rents in the countries that have reduced migration has slowed. However, like the labour market, other factors will also play a role here, such as the supply of housing in both the rental and ownership sectors. 

A further argument for reducing migration is the pressure it puts on public services such as health and education. If there are fewer migrants, people might find it easier to secure a school place or access healthcare. There’s certainly evidence in the UK of parents being able to secure a place for their child at primary schools, but this may well be to do with demographic change caused by a falling birth rate. In the UK, hospital waiting times have been falling, which could be attributed to fewer migrants; however, higher UK government spending on healthcare may also contribute to this trend. 

In any discussion of migration, it is also important to consider the economic benefits that a country might bring. Migrant workers play a crucial role in filling skills gaps in occupations that are in short supply. The UK government has set a target to build 1.5 million homes over the next four years, aiming to address a housing shortage that may require builders and engineers from abroad due to skill shortages in the UK. Similarly, doctors and nurses will be needed in the UK to enhance the quality of the country's healthcare service.

Most developed countries have an ageing population and a falling birth rate. Immigration offers a potential solution to the growing problem of an increasing number of elderly dependents, while the number of people of working age is declining. Migrants are consumers who purchase goods and services, adding to aggregate demand in the economy. 

Migration is a sensitive and complex economic issue that requires nuanced examination. Many of the consequences of migration have positive and negative outcomes that require careful evaluation by policymakers. 

Possible questions for discussion

1. What do you understand by net migration?
2. How might a decrease in net migration affect the labour market in an economy?
3. How might a decrease in net migration affect the potential output of an economy?
4. Discuss the consequences of declining net migration on health and education.