Thursday, 2 February 2017

A(nother) debate on immigration: how about starting with the facts?

Launching the Home Affairs Select Committee inquiry on immigration, Yvette Cooper called for a "national debate" claiming that immigration "was was one of those things that people just thought was a bit too difficult to talk about".  As Stephen Bush points out, virtually the only plausible explanation for this nonsensical assertion is that Yvette is somehow stuck in a Star Trek style time loop.  I first started working on immigration issues in the Cabinet Office in late 1999; migration, in one form or another, hasn't been out of the news since.  The paper I wrote then was published in early 2001, accompanied by considerable publicity, precisely because Tony Blair (and some of his Ministers, like Barbara Roche) wanted a constructive debate on immigration.  Sadly, they largely failed, as Yvette's intervention today and countless others like it from politicians who should know better show.  

However, one major achievement of that report was to kick-start funding and other government support for academic research on immigration, and in particular the economics of immigration, that had up to then been largely absent.  We now know quite a lot about the impacts of immigration on the UK economy and labour market; as my contribution to the ongoing debate, I've tried to synthesise the evidence in my written testimony to the inquiry (this also formed the basis for much of my oral evidence to the Exiting the EU Committee earlier this week). In my view, the key points are:

  • immigration doesn't appear to have any negative impacts on the employment prospects of native workers (indeed, the employment rate is at historic highs).  While the evidence on wage impacts is less conclusive, the emerging consensus is that recent migration has had little or no impact overall, but possibly some, small, negative impact on low-skilled workers.  But other factors, positive and negative (technological change, policies on tax credits, the National Minimum Wage) were far more important.
  • recent migrants, especially those from the EU, are likely to have a positive fiscal impact; however, positive net impact on public finances at the national level does not preclude significant impact on demand (and hence cost) at the local level. Broader concerns about the potential negative impacts on public services appear to be largely unsubstantiated.  This does not mean, of course, that citizens do not associate their experience of deterioration in public service quality and availability resulting from other factors with immigration ; the fact that migrants' fiscal contribution could, in principle, at least provide enough funding to cover their marginal impact on demand is not much comfort in practice if those revenues are in fact being allocated elsewhere, for tax cuts or deficit reduction, as in fact has been the case
  • the impact of immigration on productivity and hence (per capita) growth is methodologically harder to estimate. But there is growing empirical evidence, based on cross country data, of positive impacts from migration on productivity and per capita GDP.

I also discuss some of the common misperceptions about changes to the UK immigration system post-Brexit. Briefly, ending free movement 
  • might reduce migration to the tens of thousands, especially if accompanied by a much weaker labour market; 
  • doesn't in itself mean a "hard border" between Northern and Southern Ireland; 
  • will reduce high skilled as well as low skilled immigration; 
  • will involve considerably greater burdens on business, as "immigration control" is about workplaces much more than borders; 
  • and is likely to reduce GDP, GDP per capita/living standards, and worsen the UK's fiscal position.
A useful "public debate" might begin with this evidence base and move on from there.  We can but hope. My full written testimony, with references, is here





9 comments:

  1. Jonathan, thank you for posting this. Very helpful.

    Just one question: how can free movement possibly be prevented without a hard border between Nothern Ireland and the Republic?

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    Replies
    1. Because "free movement" isn't really about border control. We don't stop (in 99.9% of cases) Americans or Australians entering the UK with fairly minimal control - ditto for Europeans post-Brexit. What we do is then forbid them from working without a work permit or other permission. So there won't be any need for Poles or Portuguese to dodge border control by coming via NI - they'll just fly to Stansted as now, as tourists or visitors. The issue will be how workplace level enforcement operates..

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    2. Got it. Thanks for this very clear explanation.

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  2. 'Broader concerns about the potential negative impacts on public services appear to be largely unsubstantiated’. Why?
    I spent a significant part of my career in development planning. A major part of the development control side of that was discussing with developers what the impact of their proposals would be on the existing public infrastructure - transport, housing, health and education services - and how much they were going to contribute in terms of planning gain to the cost of providing new services where the existing ones were at capacity.
    If we take a figure of 3 million immigrants. We can estimate what the cost of building the public infrastructure for a new city of 3 million people would be. Not all the needs of 3 million immigrants would require new build/services. Some would be accommodated within the existing provision and some by less costly extension of existing services and some would require completely new provision. So you have a low, medium and high demand estimate of the public infrastructure cost as proportions of the 100% new provision cost.
    I have yet to see this sort of analysis. All I have seen are estimates of the contribution to the public purse immigrant make through income tax, council tax, VAT, etc. All are important to know but the key issue is whether these offset the cost of the additional infrastructure requirement. I personally would be amazed if it did but until someone is brave enough to produce a study of this or a similar kind putting forward some figures I can not test my assumption and we can not discuss how robust the methodology and cost estimates are.

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    Replies
    1. Don't forget, John, that in this discussion money spent by the government on infrastructure is not money lost but invested in the broader economy. In particular, infrastructure work creates jobs.

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    2. Sorry, John, that's just wrong. Public sector capital spend is factored in (in broad brush way, admittedly) to any serious analysis of fiscal impacts. But in any case capital cost of key public services (health, education - let alone welfare!) is fairly small relative to current spend.

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