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January 03, 2007

Immigration: Costs and Benefits

Sigh, MigrationWatch is at it again. This time their report really rather undermines their rhetoric though:

The alleged economic benefits to Britain of record levels of immigration are a myth, new figures suggest.

They show a ''very slight" gain of around 4p a week for each member of the native population — not enough to buy a Mars bar a month.

OK, to the native population this is all pretty much a wash. On average, no loss, with a very small gain.

Migrationwatch examined a range of British and international studies on the economic value of mass immigration, all of which indicate that, on a per capita basis, the financial benefits are minimal.

In addition, high levels of immigration place huge pressure on housing, health and schools and have an increasing impact on employment.

All of those costs are of course included in the calculations (well, they must be. I don't agree with Migrationwatch's aims but I don't think they're actually stupid. There's no way they would do a cost benefit analysis without including the costs now is there?).

But what's this?

Sir Andrew Green, the chairman of Migrationwatch, said: "Of course many immigrants make a useful contribution to the economy but, taken in total, the economic benefit is at best marginal.

''The main beneficiaries are the immigrants themselves who are able to send home about £10 million a day, not the host nation."

Interesting don't you think? A slight benefit to the native population and a great benefit to the immigrants. Everyone gains (on average of course). This is known as a Pareto improvement isn't it? (Please do correct me if I'm wrong here.) The world is a better place, the average condition of humanity has increased as a result of all this immigration. What's not to like? Isn't this what we're all supposed to be after anyway?

January 3, 2007 in Economics | Permalink


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And don't forget that the poorest (immigrants generally are poorer than natives) gain the most. It's also a Rawls improvement. (But I could be wrong here aswell.)

Posted by: ivan | Jan 3, 2007 9:29:31 AM

Presumably their point is that while there is a marginal economic benefit, there are downsides in terms of community harmony, national identity and so on.

That they don't see fit to list these downsides is perhaps not surprising - they're not easy arguments to make without sounding like racists.

But you're right - you get the feeling that they did the sums again and again until they got the number down sufficiently to make it into a good soundbite.

Posted by: Mr Eugenides | Jan 3, 2007 9:36:04 AM

A slight ECONOMIC benefit to the native population ... but as Mr E implies, money isn't everything.

Mass immigration into the US, NZ and Australia has almost certainly been economically beneficial to the Native Americans, Maoris and Aborigines.

Likewise the native Fijians must have gained from all those hard-working Indians who arrived during British rule.

I'm not sure they'd agree it's been beneficial in all other ways though.

Posted by: a | Jan 3, 2007 9:46:18 AM

My concern about the current wave of migration is that the economic cost lags the current benefits. The cost of childcare, health, and eventually pensions will only come later. Also, if we have a recession the consequences could be terrible.

Posted by: Kit | Jan 3, 2007 10:46:09 AM

Comparing mass immigration into the US, NZ and Australia with current immigration into the UK is like comparing apples and pears.

I think MigrationWatch have completely shot themselves in the foot with this. They have actually managed to correct a massive misconception amongst the broader public - i.e. that immigrants cost money.

Posted by: Katherine | Jan 3, 2007 10:46:53 AM

"Everyone gains (on average of course). This is known as a Pareto improvement isn't it?"

No. A Pareto improvement is when there are gains (or no losses) for each individual, not just on average. Clearly some individuals can and probably do lose from immigration, most likely those competing with immigrants for jobs and housing. It would only be a Pareto improvement if the 'losers' were fully compensated for their losses by the winners. So right now I think this would be a 'potential Pareto improvement', or a Kaldor improvement.

Posted by: Jim | Jan 3, 2007 11:00:10 AM

community harmony and national identity. Hmm. Pace Mr E, with whom I agree most of the time, I'm not at all sure about 'community harmony', not least because 'community' is such a weasel-word (Stephen Poole is very good on the subject in his book Unspeak).

In my observation, at least in the UK most people are happiest when left to get on pursuing their lives as seems best to them, and are perfectly willing to let others do the same. When conflicts arise, as inevitably they must, between individuals pursuing their different courses, these are best resolved by amicable negotiation.

The state's role in promoting 'community harmony', it seems to me, is best confined to enforcing some minimum standards of behaviour on individuals who insist on making life difficult for everyone else. This, I hasten to add, it should do through the normal criminal law rather than by handing out ASBOs, but that's another question.

As Michael Oakeshott says, in 'On Being Conservative', the proper business of government 'is to keep its subjects at peace with one another in the activities in which they have chosen to seek their happiness.' I would there gloss 'subjects' as 'those who are subject to the rule of a particular government because that's where they happen to be living' rather than as having anything to do with what passport you hold. Other than that, what's wrong with governments just leaving people to get on with their lives, wherever they seek to pursue them?

Posted by: Not Saussure | Jan 3, 2007 11:04:15 AM

"When conflicts arise, as inevitably they must, between individuals pursuing their different courses, these are best resolved by amicable negotiation."

I think I must live in a United Kingdom in a parellel universe. Targeted violence is the negotiating tool of choice round my way.

Posted by: a | Jan 3, 2007 11:49:35 AM

The conclusion is hard to believe. If a migrant worker earns £6 per hour, his employer and the government will gain something like £3 per hour in extra profit and taxes.

How this results in a net contribution of 4p a week escapesme.

Posted by: james C | Jan 3, 2007 12:05:01 PM

Targeted violence is the negotiating tool of choice round my way. Really?

Assuming you're not a crack-dealer, or something, I find that difficult to believe. Even in Russia during the early 1990s, when I was working there, 'targeted violence' wasn't the negotiating tool of choice with the mafiya there. They'd use it, certainly, but even they preferred negotiated solutions whenever possible, since unnecessary violence only disrupted their money-making activities.

Posted by: Not Saussure | Jan 3, 2007 2:13:47 PM

Not Saussure: which Saussure are you not? The linguist?

I think an awful lot of the heat could be taken out of this debate if the issue of benefits were addressed. What has a lot of people's noses out of joint is the ease with which new arrivals can get access to the full panoply of State support. I would favour completely forbidding receipt of State benefits (with the exception of emergency health care and, perhaps, education for native-born children of immigrants) for seven years after leave to stay was granted.

The problem with this, as in so many other areas of policy, is that the malign combination of the EU and the Human Rights Act makes it impossible.

Posted by: David Gillies | Jan 3, 2007 3:36:08 PM

I'm in favour of the free movement of labour, but only among countries with a similar cultural (basically Christian) heritage. Admitting unlimited numbers of Muslims -- for example -- will result in many disadvantages - eg cultural conflict, ghettoisation, sharia-creep, homegrown Islamo-fascism - that are difficult to quantify but which would easily erase the minimal financial and fiscal benefits of admitting them in the first place.

Free-market economics is good, but not an absolute good. Therefore it admits of degree; and the degree at which I draw the line is where it threatens cultural survival. We are not merely atomised individual economic agents: we depend for our personal identity on our culture.

Posted by: paul ilc | Jan 3, 2007 7:50:54 PM

The nation has been, and is still being, eroded and hollowed out from within by the implantation of large unassimilated and unassimilable populations … in the heartland of the state. … The disruption of the homogeneous “we”, which forms the basis of parliamentary democracy and therefore of our liberties, is now approaching the point at which the political mechanics of a “divided community” take charge and begin to operate… The two active ingredients are grievance and violence.

Enoch Powell (a noted free marketeer), quoted on the Civitas blog.

Posted by: paul ilc | Jan 3, 2007 8:03:33 PM

I think you miss an important point.

Regardless of the benefits or otherwise of immigration per se, the government has been getting away with quoting the growth of GDP relative to other European countries as evidence of the success of its economic policies (even if our GDP growth is modest by world standards). But as Migration Watch points out, it's GDP per person that matters and if we require large scale immigration in order to maintain reasonable GDP growth, then something is going badly wrong with the economy.

Posted by: HJHJ | Jan 3, 2007 9:56:22 PM

"The world is a better place, the average condition of humanity has increased as a result of all this immigration. What's not to like? Isn't this what we're all supposed to be after anyway?"

Tim, my prediction for this year is that there will be violence between separate migrant groups in either Inverness, Wrexham, Crewe or Slough, most likely between Romanians and Poles, as a consequence of 2007 migrants displacing 2004 migrants.

That is a perfectly forseeable consequence of allowing two separate waves of migration so close to each other - the newer ones will push out the older ones because they'll be prepared to work for even less.

We don't get paid in happiness, can't eat happiness and can't save happiness; so suggesting that we can import it is poor science.

And in December I'll be fascinated to see just how many Romanians will have been convicted of cashline fraud this year as opposed to last.

Posted by: Martin | Jan 3, 2007 10:09:03 PM


Have you any evidence that offending rates are higher among immigrant Poles (say) than comparable indigenous communities?

Posted by: paul ilc | Jan 4, 2007 9:00:03 AM



Posted by: Martin | Jan 4, 2007 9:57:30 AM

Because, Martin, without such evidence, your prejudices are without foundation.

My hunch is that a group of randomly selected immigrant Poles would be convicted of fewer crimes in the UK in 12 months than a comparable randomly selected group of Brits with the same class and age-structure. However, I think the position would possibly be reversed if we conducted the same research with Somalis or Albanians...

My experience of Polish immigration is overwhelmingly positive, apart from one girl I had to sack (nice person, but extreme dieting left her too weak to do the job). We had a group of young Poles living a few doors away for a year. Always polite, if exuberant when drunk, they were good neighbours.

Posted by: paul ilc | Jan 4, 2007 2:37:12 PM

Read the observation again, and stop describing perfectly reasonable speculation as prejudice.

Posted by: Martin | Jan 4, 2007 10:01:46 PM

By the way, by what proportion has your wage bill gone down since you started hiring Poles?

Posted by: Martin | Jan 4, 2007 10:02:40 PM


Look, Paul's suddenly gone all quiet when asked how much money he's saved through immigration...

Posted by: Martin | Jan 6, 2007 9:35:59 AM

"How this results in a net contribution of 4p a week escapesme."

It is not a net contribition per week of 4p.
It is not a net benefit to people living in the UK of 4p.
They took the government figures for 2005 and divided the benefit to the economy/the increase in population and got 4p benefit to every person who was living here before 2005 from migration to the UK in 2005.

Posted by: gorwell | Jan 10, 2007 2:11:48 PM

I rather have Poles than Islamic militants who are the real benefit cheaters in this country

Posted by: redjupiter | Oct 5, 2007 12:58:45 PM