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Migrants: Benefit or burden?

Ayhan Mehmet | Anadolu Agency | Getty Images

From the U.S.-Mexico border to the Mediterranean in Europe, the current mass movement of people seeking a safer and more prosperous home is making headlines across the globe.

As countries struggle to cope with the vast numbers of arrivals – many of whom are fleeing savage conflicts and great economic hardship – the issue of whether migration is economically beneficial has become increasingly emotive, especially in Europe.


Last week, U.K. Home Secretary Theresa May gave a speech at the Conservative Party conference in which she said that, "When immigration is too high, when the pace of change is too fast, it's impossible to build a cohesive society."

The number of people looking to start a new life on the continent is increasing rapidly. According to Europe's statistics office, Eurostat, there were 626,000 asylum applications in 2014, an increase of 195,000 on the previous year. This number is only set to increase.

In August, Germany's Federal Ministry of the Interior announced it expected "up to 800,000 asylum applicants and refugees," to arrive in the country this year, a fourfold increase compared to 2014. A recent report in German daily Bild stated that the figure could be as much as 1.5 million.

For Carlos Vargas-Silva, associate professor and senior researcher at the University of Oxford's Migration Observatory, the economic impact of migrants can be read in two ways: a fiscal impact – taxes and contributions that new arrivals will make, minus the benefits and services they receive – and the impact that they have on the labor market, which is essentially whether native workers will be displaced from their jobs or not.

"Most of the evidence suggests that there's no actual displacement of native workers by migrants because they tend to do different jobs, they tend to specialize in different things," Vargas-Silva told CNBC in a phone interview.

"One thing that we know about the current migrants, the current refugees, is that they are young," he went on to add.

"This is key, because if you're young it means you have 30-35 years left of working life, so you are going to be working for a few decades, and that means paying taxes for a few decades," Vargas-Silva said. "Overall, your contribution will tend to be positive."

U.K. based think tank Migration Watch says, however, that for the U.K. immigration is currently, "neither sustainable nor well managed," and that "High net migration has resulted in rapid population growth."

The think tank adds that with a larger population comes the need for infrastructure expansion and that, "increased migration will not generate the extra tax revenue needed to pay for such infrastructure expansion."

Regardless of the opposing views on the matter, the mass movement of people looking for a better life is set to continue.

Last week, the World Bank and IMF released a report which stated that the large scale migration of people from poorer parts of the world to richer regions will carry on for years.

"With the right set of policies, this era of demographic change can be an engine of economic growth," World Bank Group President Jim Yong Kim said in a release.

"If countries with aging populations can create a path for refugees and migrants to participate in the economy, everyone benefits. Most of the evidence suggests that migrants will work hard and contribute more in taxes than they consume in social services," he added.