ABSTRACT
This chapter presents core results from the economic literature on the effects of immigration and population size on income per capita of residents. Under constant returns to scale (doubling inputs in production doubles output), population size is irrelevant for income per capita. With immigrants identical to residents in productive characteristics and capital per worker constant, immigration has no effect on income per capita. With immigrants bringing a different mix of productive characteristics than residents have, wages for different types of workers and the return to capital will change: substitutes will lose; complements will gain. Generally, the extent of redistribution between winners and losers is larger than the change in the average income of residents. The conclusion that the effect of immigration on the average income of residents is modest at best also holds for the growth rate of income per resident. Population growth and hence, immigration, increase scarcity of land, but the benefits of higher land prices accrue to landowners. The effects of immigrants on the public budget, measured as estimated net lifetime contribution of the immigrant population present in the Netherlands in 2016, varies by motive and source region: positive for first-generation Western, negative for first-generation non-Western, positive for labour migrants and negative for family migrants and refugees.
