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March 08, 2007
The Benefits of Immigration
David Coleman is all over the Telegraph today, after his "targeting" by a pro refugees group. He makes this comment about the economic benefits (or not) of immigration:
Naturally immigrants increase overall GDP but they also increase population, and what matters is GDP per head.
A number of studies show that the net economic benefit of immigration per head of population is about 0.1% of GDP.
In the UK, GDP is about £1.3 trillion so 0.1% is about £1300 million. Per head, among 60 million people in the UK that amounts to about £22 each per year or just under 50p each per week.
(The Telegraph subs are responsible, I assume, for that calculation not actually making sense).
The one problem with that calculation is that it is not complete. It's looking at the benefits of immigration to the indigenous...and as is noted, that's about a wash. But we also need to look at the benefits of immigration to the immigrants. While I don't have those figures to hand the fact that they come would indicate that there are in fact such. So overall, the economic effects of immigration are strongly positive.
Which is interesting, don't you think, that the figures that MigrationWatch themselves use, immigration is strongly a net benefit?
March 8, 2007 in Your Tax Money at Work | Permalink
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"It's looking at the benefits of immigration to the indigenous...and as is noted, that's about a wash. But we also need to look at the benefits of immigration to the immigrants. While I don't have those figures to hand the fact that they come would indicate that there are in fact such. So overall, the economic effects of immigration are strongly positive.
Which is interesting, don't you think, that the figures that MigrationWatch themselves use, immigration is strongly a net benefit?"
No.
Consider the right of residence and the right to work as property rights. Too many people sharing them dilutes their value.
All discussion of immigration economics must proceed from the assumption that the migration is of some benefit to the migrants - otherwise, why would they wish to move?
You're stating the obvious, Tim.
Again, you repeat,
"So overall, the economic effects of immigration are strongly positive."
By what standard? For whom?
They can only be viewed as being 'strongly positive' if it is assumed that the immigrant and the native are economic equals - which, given that one wishes to share in the rights and freedoms endowed by the other's heritage, culture and history, they're clearly not.
Read Borjas; he's only an economics professor at Harvard -
'The Labour Demand Curve is Downward Sloping' -
http://ksghome.harvard.edu/~GBorjas/Papers/w9755.pdf
and
'Immigration in High-Skill Labor Markets: The Impact of Foreign Students on the Earnings of Doctorates'
http://www.nber.org/papers/w12085
Borjas' duplicated conclusion is that an increasing the labour pool by 10%, no matter the type of labour, causes real wages to drop by 3-4%.
Now of course economics is not a zero sum game, blah blah, increasing the sum of human happiness, blah blah - but the operation of the Borjas Quotient does rather indicate that any increased gains from mass immigration must be pretty spectacular indeed for them to counterbalance its detrimental effect on native earnings.
Posted by: Martin | Mar 8, 2007 10:22:40 AM
Tim, in France the consequences of your immigration policy are that people can't leave their cars outside without them being burnt. The French gov has stepped into action by banning people reporting on it (cos then it's not real you see - very Sartre).
So to save my car and my Free Speech, I'm willing to forego certain (short term) economic benefits.
That's the argument, ignore it if you will.
(Now in a perfect world, this problem could be easily solved by asking all prospective immigrants a simple set of questions along the lines of
1)Do you wish to slay the infidels?
2)Will the evil Capitalists find their doom in a lake of fire/gulag/nuclear fallout?
etc.
and deporting anyne who gets out of line, even if it is to a unpleasant country where they will be tortured on return.
Then I'd say "Open the Doors!"
but we're never going to get that, so there's no point in discussing it)
Posted by: G | Mar 8, 2007 11:07:41 AM
The fallacy is that it assumes the population is a fixed amount. Since immigrants immigrate they naturally increase the population.
If GNP goes up by 0.1% & immigration is 0.0219% then we have an average loss of 0.0119% per person. http://www.geographyiq.com/ranking/ranking_net_Migration_Rate_dall.htm
Posted by: Neil Craig | Mar 8, 2007 1:28:15 PM
Neil: read the goddamn piece - we're talking about the impact on GDP per head, not on GDP.
Martin: again, MigrationWatch's own figures show that immigration has a positive impact on GDP *per head*. That means *either* that the median immigrant eanrs more than the median native, *or* that immigration has aggregate economic benefits for the indigenous population. The former seems unlikely, somehow.
Posted by: john b | Mar 8, 2007 1:52:15 PM
John,
When mass immigration increases GDP per capita by a whopping £0.50 a week (the price of two cigarettes), the principle 'de minimis non curat lex' is really begging, gagging to be applied.
Let's try Tim's old tutor, Lord Layard -
"There is a huge amount of evidence that any increase in the number of unskilled workers lowers unskilled wages and increases the unskilled unemployment rate. If we are concerned about fairness, we ought not to ignore these facts. Employers gain from unskilled immigration. The unskilled do not. "
Whoops! His Lordship's not quite with the program!
Here's Martin Wolf of the FT, writing on April 13 2004 -
"In a competitive economy the gains from migration should largely accrue to migrants themselves, leaving little over for the recipient community. In theory, the latter will enjoy an economic surplus. But this likely to be small'.
Don't know about you John, but I'd class £0.50 a week as small.
Both of the above quotes are taken from Anthony Browne's seminal 'Response to Tony Blair's First Speech on Immigration', which Browne authored on behalf of that well-known gang of leftists, nativists and economic illiterates, Civitas -
http://www.civitas.org.uk/pdf/BrowneEconomicsImmigration.pdf
Posted by: Martin | Mar 8, 2007 2:21:26 PM
We're agreed, then, that immigration has a net economic benefit to natives, even once we've paid for housing, English classes, and all the other usual things people object to. (& £1.3bn 'small'? I'm not convinced you'd say that if it was the cost of, say, a Dome or some games...)
If your objection to immigration is that the economic benefit disproportionately accrues to natives in medium-and high-wage jobs, then surely the best solution is to use taxation to distribute the gains more equitably across different groups of natives? That way, we'll have an entirely optimal situation, with natives of all income groups *and* immigrants all better off.
And guess what? By a weird coincidence, the government has been raising taxes on medium- and high-earners and redistributing the money to the native born poor.
Posted by: john b | Mar 8, 2007 3:47:15 PM
John,
Please re-read my previous comment.
It is poor debating technique, akin to spin, to equate one method of measurement (average benefit per person per week) with another (estimate of total benefit).
Debating whether or not £1.3 bn is a small amount of money or not is absurd - as a bald figure, its very size renders it an abstraction; describing it as a Mars Bar, or two cigarettes, a week at least provides it with a measure of context fans of big numbers such as the Prime Minister and the Chancellor usually abhor.
Pace your argument concerning the Dome, to compare expenditure on the Dome with expenditure/gain arising from immigration is, again, absurd. Regardless of whether or not one agrees with its construction (I don't, it was just another example of Blair's fetid hubris), at least the Dome is there - it was expenditure that produced a visible outcome.
One can go there, close one's eyes and kick it if one wishes.
How can one say the same of the very small gain arising from immigration?
How?
I'm puzzled by this remark -
"If your objection to immigration is that the economic benefit disproportionately accrues to natives in medium-and high-wage jobs, then surely the best solution is to use taxation to distribute the gains more equitably across different groups of natives? That way, we'll have an entirely optimal situation, with natives of all income groups *and* immigrants all better off."
Where did that come from? My objections to mass immigration of the kind we have seen over the last 10 years is -
1. It was never debated as a policy
2. Its negative effects have been swept under the carpet by an absolutely toxic cocktail of cultural Marxism and bad, or at least incomplete, economics, which our elites have willingly supped while the rest of us face the consequences.
Posted by: Martin | Mar 8, 2007 5:50:29 PM
In your previous posts you were using economic arguments, so I was responding to them - I wanted to clearly establish the point that immigration has had a positive overall economic impact on native Brits, that it's possible to correct for the negative distribution effects through taxation, and that this is precisely what has been happening.
It is reasonable for you (or anyone else) to say "the economic benefits of immigration are not large enough to outweigh the negative social effects" - I disagree, but it hasn't been disproven.
It is reasonable for you (or anyone else) to say "it was wrong of the government to allow mass immigration without a referendum/public debate" - I disagree, but it's an opinion about the kind of democracy we should have and not a factual statement that can be disputed.
All I'm saying is that it is not reasonable for you (or anyone else) to say "immigration has not had a positive impact on the UK economy". It demonstrably has, and to claim otherwise is a lie.
Finally, if £1.3bn is too big to be a relevant figure, how about "five large hospitals"? That's pretty concrete, and no more or less misleading than your "2 cigarettes for everyone" example.
Posted by: john b | Mar 8, 2007 6:03:16 PM
On the basis that the head of immigration services last night answered the question "how many migrants are here, just a rough number?" and her response took 4 -5 minutes of concentrated NuLab Blearsspeak and didnt include one actual number or digit or anything remotely resembling a number........you can be asured its not a good thing is it.
3 million migrants, 1 million unemployed, minimum wage and millions on income support you work it out. It snot about migration its about calculation!
Posted by: Steve | Mar 8, 2007 6:24:03 PM
If it was good for us Blair and Brown would be shouting it from the rooftops instead of spinning the latest migration report with the headline "asylum numbers down on last year" when anyone with a brain knows that asylum seekers make up less than 4 % of migrants (official figures) and that the rest are initially sanctioned by govt, have their permit extended (88% approvals)and are from the EU or other reasons such as family etc etc
The government is floodoing the country with cheap labour for reasons they are hiding.
I couldnt care less how many migrants we get here as long as they stop paying people to be on the dole. you cant have it both ways without being honest with the people. everybody knows this is happening and yet the press and pc free speech restrictions make it impossible to speak out. the govt just lie its a simple as that.
How much a year are we losing in tax fraud to UK landlords using the tax breaks on providing accomodation to migrants??
How can a place liek Boston in Lincs have 25% migrant population and yet official figures say there are 600,000 permits inteh country??? the whole govt has been run on a hidden agenda of ineptitude, envy politics and corruption.
Posted by: Steve | Mar 8, 2007 6:33:46 PM
But the other thing that Migration watch miss from their own report is that the 0.1% figure seems to be a percentage point increase in the growth rate of GDP (probably per capita), not a static comparison of GDP in any one year with and without immigration. Seems to be: they use the ambiguous phrase 'a year' and so on.
Buit this bit here, especially para 16 seems clearly to relate 0.1% (actually 0.14%) to the grwth rate - other paras have higher or lower figures: http://www.migrationwatchuk.org/pdfs/economic/1_1_Migrants_Do_they_bring_economic_benefit.pdf.
Now if growth is roughly 2% per year, a 0.1 percentage point is not trivial. Not massive, compared to other things that will affect the economy, but well worth having. The higher estimates of 0.4-0.5 percentage point differentials are quite transformative of course: GDP per capita more than 50% higher than it would otherwise have been, before the end of the century.
Posted by: Erasmus | Mar 8, 2007 7:38:41 PM
Steve: yes, it is about calculation. Economists are very good at calculation, and sometimes good at finding the right numbers to calculate. You appear not to be very good at either.
Erasmus: good spot! That's something that I need to look at in more depth when I get the chance...
Posted by: john b | Mar 9, 2007 12:48:03 AM
John,
"All I'm saying is that it is not reasonable for you (or anyone else) to say "immigration has not had a positive impact on the UK economy". It demonstrably has, and to claim otherwise is a lie."
Although your assumptions are perhaps economistic in their broad approach, in terms of the bald numbers which both parties they have presented they are perfectly valid and have been accepted as such.
The only thing that's relevant is its scale. As a comparator, five hospitals is as good a meter of two cigarettes a week.
Pity it doesn't seem to factor in the cost of staffing and heating them.
Erasmus -
"Now if growth is roughly 2% per year, a 0.1 percentage point is not trivial. Not massive, compared to other things that will affect the economy, but well worth having. The higher estimates of 0.4-0.5 percentage point differentials are quite transformative of course: GDP per capita more than 50% higher than it would otherwise have been, before the end of the century."
Your first sentence is subjective, your second perhaps wishful thinking.
Posted by: Martin | Mar 9, 2007 6:48:01 AM
"If it was good for us Blair and Brown would be shouting it from the rooftops"
Similarly, if the private equity industry was good for us you'd find them shouting about it from the rooftops?
No. What Blair and Brown are is politicians, who have goals above good-for-us/bad-for-us.
Posted by: Kay Tie | Mar 9, 2007 10:12:22 AM
