Immigrants can unlock productivity growth

Moscow

IMMIGRATION has been making economies demonstrably more productive ever since there have been accurate output statistics. It's not a straightforward effect, however: The immigrants need to be well-suited to the needs of the receiving country's labour market.

In 1685, Louis XIV issued an edict banning protestantism in France. The "heretics" - Huguenots - moved on; they were welcomed by the rulers by then-backward Prussia, hit hard by the 30-year war and plague outbreaks. Prussian rulers never regretted the inflow of up to 20,000 Huguenots, or about 1.3 per cent of the country's population: The influx resulted in a lasting productivity boost.

Erik Hornung of the Ifo Institute of Economic Research in Munich used Prussia's meticulous records of immigration and production to determine that in factories established in the towns where the French protestants settled, a one per cent increase in the population share of Huguenots translated into 1.4 per cent higher productivity in the textile industry, in which they were particularly skilled, and the increase held even 100 years later, after many Hugu…