business

Immigration: Talk is Cheap

9 years ago
by Charles Low
Immigrations, economics, kettlemag, charlie low
Written by Charles Low

Immigration is hot right now. IPSOS Mori, a market research company, showed that in September ‘Race relations/immigration’ was the most-frequently mentioned most ‘important issue’ facing Britain.

Politicians are jostling it out to see who can talk the toughest on cracking down on immigration. The press, the public and the politicians all seem to be up in arms, but the chain of causation seems to be all blurred. Alex Wickham, a reporter at Guido Fawkes calls the debate on immigration the most disingenuous one in British politics. 

Some Background

Immigration to the UK has increased since the 1970’s. While my chart below shows that net migration is indeed increasing, there is also an increase in the natural population growth, that is there are also more births than deaths. Something of a baby boom, some might say.

Two common cries in anger against this trend is that immigrants take British jobs and that Britain is already too crowded for ever more people.  However, many of these claims appear to have been fuelled by some questionable data and even more questionable reporting

Furthermore, Britain’s attitude to the principle of freedom of movement appears to be incredibly two-faced:

On top of that, it seems like we just love to complain more generally. The tweet below gives you some insight into that.

The chart from IPSOS Mori suggests that actually concerns about immigration tend to be replaced by more economic concerns when the economy is worse for wares. Taking that trend to its logical extension it seems that when we are not complaining about jobs we are complaining about immigrants taking them. But, when we complain about immigration we can also complain about the lack of jobs. So, we are always just banging on about jobs.

Okay, that is fatuous. I know. And, the chart only points to a correlation and does not say anything about causation. Overcoming this though, there is a widely accepted need to explore the pro’s and con’s of immigration. Or, costs and benefits, if you will.

What research tells us on the economics of immigration to the UK

Notwithstanding the not-trivial issue of discussing a human phenomenon (migration) in rather inhuman terms (costs-and-benefits), it does seem, as Sam Bowman of the Adam Smith Institute has argued convincingly, that our concerns about immigration are largely related to economics. 

Addressing those concerns is not easy because the cost-benefit evaluation of immigration is fraught with difficulties. Migration is, after all, a rather dynamic process and most of the techniques that we have to evaluate the economics of it are rather static in nature.

Research has generally shown that immigration to the UK has a positive, but small contribution to the UK’s fiscal position. European Economic Area (EEA) migrants were found to contribute more to the UK’s fiscal position than non-EEA migrants. These findings were disputed. This pretty fun interactive chart from the OECD allows you to look at different elements to the story of immigration for different OECD-nations:

Moving onto benefits, some estimates have shown that migrants in the UK are less likely to claim working benefits than natives by some margin. However, counterclaims have tended to criticise researchers for overstating the amount of tax that immigrants pay in and underestimating the amount of benefits they receive. I would be inclined to say it evens out somewhere and overall has a fairly benign impact.

Research also shows that, generally speaking, immigration has a limited affect on UK workers’ wages. However, the most deleterious affects of immigration on wages tend to be in lower-income levels and on fellow immigrants (p42). That’s right, more immigration may actually hurt immigrants rather than natives. 

What about job creation? It is naturally difficult to find a causal relationship between immigration and job creation. Work done this year by the Centre for Entrepreneurs, a think-tank, showed that one in seven UK companies was founded by a migrant. However, to the extent that these enterprises create jobs the picture is less clear. 

On the point of job creation, however, it must also be stressed that this age of migration to the UK has occurred simultaneous to a fundamental reorientation of the British economy. This reorientation has occurred due to a combination of factors: deindustrialisation, wider globalising forces and market liberalisation. The following two charts are illustrative of this:

Ben Southwood, of the Adam Smith Institute observes that there is a hollowing-out of middle-class jobs:

And, I show that since 1978, British deindustrialisation has massively altered the kind of jobs we have in Britain:

It’s Cheap to Blame Immigrants

What I have attempted to say here is that it is overall very difficult to evaluate the true costs and benefits of immigration to the UK. Furthermore, I have tried to show that immigration to the UK since the 2000’s has occurred after and during fundamental changes to the structure of the UK economy. It also seems to be the case that people vent their frustrations on the issue of immigration.

Our collective failure to recognise migration as a function of wider societal processes and globalisation tends to lead us, the media and politicians to see migration as a problem that needs to be changed. 

Instead, we should maybe focus on the non-economic benefits that it brings us that one of the more right-leaning commenters on the topic has previously alluded to. Professor Robert Rowthorn of the think-tank Civitas has observed that immigration “ may also bring benefits such as a more varied cuisine, exposure to new ideas and a less parochial world-view amongst the native population”.

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