A lot has been made in the last few weeks about Poland cutting taxes for the young to prevent them emigrating. The fear, it is said, is that with Poland seeing heavy emigration in the last fifteen years a “brain drain” has occurred, wherein the country’s best and brightest have abandoned Poland. For migration researchers, this trend is not so simple as Poland being left weaker by emigration and even the term itself, “brain drain”, obscures the real benefits and drawbacks of migration.
The income tax cut, which came into effect in early August, takes the tax rate down to zero for those under 26 earning under $22,000 per year. It was one of a number of election promises made by the leader of the ruling Prawo i Sprawiedliwość party earlier in the year, in a clear effort to win voters ahead of October’s parliamentary elections. The promise tapped into fears among Polish citizens about demographic decline. With the fertility rate incredibly low and general resistance to immigration, the country is naturally concerned with what’s going to happen to Polish industry and the welfare state (a concern shared across the continent).
For Poland, this worry needs to be seen in context. Since around 2004 (when Poland joined the EU and gained access to member countries’ labor markets) the country saw emigration of well over a million people, many to the U.K. To give a picture of this, in 2001 the number of Polish-born people living in the U.K. was 58,000. By 2011 that number had risen to 676,000.
This history, coupled with today’s record low unemployment and labor shortages in Poland, might lead one to see a picture of emigration since 2004 as simply a bad thing. A brain drain, perhaps. But Barbara Jancewicz, head of the Economics of Migration Research Unit at the Centre of Migration Research in Warsaw, says this is not the correct picture at all.
“If those people (who left) had stayed we would have had a lot of young frustrated people just searching for work,” says Jancewicz. “So the fact that they migrated saved us a lot of trouble. In a way they got something; they could work and they could develop and they could earn money and get new skills. And in that time our economy grew.”
The problem with the term “brain drain” is that it ignores the benefits brought by emigration. As Jancewicz described in the specific case of Poland, in the early 2000s unemployment was at record highs and many Poles had better opportunities for their own development abroad. Many of those that left gained experience and skills that might have been unavailable to them in Poland, especially lower-skilled workers (another pernicious aspect of the “brain drain” idea, according to Jancewic,z is that only highly-skilled people were able to leave). Those people who chose not to emigrate found themselves with less competition for jobs. On top of that, remittances flowing into Poland exploded after 2004 as Poles working in wealthier EU countries sent billions of euros back home, helping to stimulate the Polish economy.
It’s these factors, among others, that get missed in the blanket coverage of “brain drain.” Barbara Jancewicz said she prefers terms such as “brain circulation” which give a better picture of what’s going on.
Michael Clemens, economist and senior fellow at the Center for Global Development in Washington, also says brain drain” is an unhelpful term.
“It is common to define skilled migration as something that necessarily harms the countries that migrants leave. This has been true ever since a sensationalist newspaper coined the unfortunate term ‘brain drain’ in 1963, referring to British scientists emigrating from the UK.”
Clemens says the ability to emigrate in itself can be a driver of development: “Economic research has shown that the very possibility to emigrate with skills is a major reason that people in poor countries invest in skills in the first place, even though many such people do not end up leaving. That option also benefits developing countries through the formation of trade and investment networks, and transfers of remittances and skills.”
He says countries should try to maximize those economic benefits and use them to grow the economy. This is of course good in itself but it would also help entice high-skilled émigrés back home. Which brings us back to Poland.
Barbara Jancewicz says that if Poland really wants to retain its young people, it should focus on improving the overall economy. She also points out that this is already happening: “We can actually see that our economy keeps growing, and slowly the number of people that leaves is falling.” Indeed, Polish emigration has been falling since 2012 and the arrival of hundreds of thousands of Ukrainians since 2014 is helping to ease labor shortages in some sectors.
She says the tax cut probably won’t do much to keep those who want to leave from doing so anyway, especially considering the free access they get to wealthier EU labor markets. And an age cut-off of 26 is probably a bit too low to entice people back, considering most people won’t migrate before their early 20s. It might, however, have some influence on young voters’ electoral preference as they feel the effect of the cut before October’s elections: “It’s obviously part of an election strategy of the governing party (PiS).”
Jancewicz says there are other more detailed fixes to the system overall that would be more beneficial than a headline-grabbing tax cut. For instance, she says a tax cut for women in work does not extend to maternity leave and thereby disincentivizes them from making more Polish people.
Ultimately though, Jancewicz says Polish migration is about the wealth gap between Poland and the richer EU countries and this tax cut doesn’t nearly go far enough to address that gap. Instead, policymakers should look to improving Poland’s economy overall: “People tend to move to richer countries and leave poorer countries. (The government should take) more of a general approach to reducing the tax wedge for everyone, especially for those who earn the least.”