The great demographic shift: For developed countries, closing the door to migrants lowers economic growth

Elsewhere, countries that offer their citizens generous social benefits have also faced a dilemma when it comes to opening their borders. The Scandinavian countries have remained relatively closed off to migration, largely because the social obligations assumed by the state proved greater than the benefits of acquiring new working-age residents.

Quite simply, the social systems of many developed Western countries are not prepared to receive labor migrants, even though employment itself promotes integration and helps prevent rises in crime. For example, welfare systems in the Scandinavian countries are structured in such a way that for many migrants it is more advantageous to live on generous benefits than to take jobs paying the minimum wage. It is precisely this aspect of benefit systems, along with the cost of their bureaucratic administration, that supporters of replacing all benefits with a universal basic income criticize most often. Another major obstacle to integration is that asylum seekers generally have no right to work until their refugee status is approved.

However, cuts to refugee benefits in Denmark had negative effects. At first, they did indeed push refugees to find work and doubled their incomes and employment levels, exactly as the reform’s authors had intended. But in the long run, the effect of the cuts faded: after five years, employment fell again, poverty increased, and crime rose along with it. The academic performance of refugees’ children also declined, and later in adult life they had lower incomes and were more likely to commit crimes.

Sweden long assumed the role of a "humanitarian superpower," and the country has accepted large numbers of refugees. However, this category of migrant is far more difficult to integrate than people who move specifically in search of work. Their average age is higher, which reduces their value to the labor market. Refugees’ culture often differs substantially from that of the host country. Moreover, they are frequently traumatized by the circumstances that forced them to flee, which weakens their capacity for integration and increases the likelihood of criminal behavior, leaving them disproportionately dependent on welfare benefits.

As a consequence, Sweden was unable to absorb the enormous number of migrants it accepted. Today, one in five residents of the country is foreign-born, but migrants are far more likely than natives to be unemployed, accounting for nearly half of all jobless people in the country.