Wednesday 6 May 2015

Analysis: The migration conversation

by  Ian Preston
What do the election manifestos say about migration? Ian Preston, professor of economics at University College London, gives his analysis.

Of the five main nationwide parties, three – UKIP, the Conservatives and Labour – emphasise in their manifestos a need to deal with the negative aspects of immigration. UKIP argues that the high inflows of the past two decades have damaged labour market prospects of the British-born and placed pressure on public services. By withdrawing from the EU, it proposes to introduce a visa system covering migration from all sources which would place a five-year moratorium on any unskilled migration and heavily restrict the numbers of visas issued for high-skilled labour.

The Conservative Party also stresses the harm to public services and re-endorses an aspiration to cut net migration to the tens of thousands. Labour, without committing itself on whether or not such concerns are justified, acknowledges a need to address public concern on labour market and public service effects. None of these propose any significant relaxation and all propose at least modest tightenings in certain respects.

By contrast, the Liberal Democrat and Green manifestos concentrate on the positive side of the free flow of people. Their policies are correspondingly modestly liberal, at least proposing to reverse some tightenings introduced by the outgoing government. Both would reintroduce some sort of post-study work visa for foreign students, scrapped in 2012. The Greens would also scrap minimum income requirements for spousal immigration, a measure brought in during 2012.

The labour market impact of immigration is something that economists have studied in depth in many countries. Little persuasive evidence has emerged to support a picture of adverse effects on average wages or on employment, either in the UK or elsewhere. Economies appear to have many ways to adapt to absorb changes in the size and composition of the labour force without native employment or average wages needing to suffer. Immigrants to the UK are typically young and well-educated but nonetheless work, at least in the early years after arrival, towards the lower end of the wage distribution. If there are any negative effects on wages, they are probably felt here, albeit that such effects if they exist are small and probably temporary. Some of the manifestos do show particular keenness to address effects on the least well paid.

Immigrants make use of public services and rapid changes in numbers may involve costs of adjustment. However, evidence suggests that immigrants use public health services no more intensively than natives, that the presence of non-English speaking children in schools does not hinder education of native children and that immigration is unassociated with increases in crime. Nor do immigrants draw heavily on welfare benefits; on the contrary, recent immigrants are less likely to claim than natives. Empirical support for the idea of extensive welfare tourism is tenuous.

What immigrants do do is pay taxes and they do so to an extent that means that, broadly considered, the net fiscal contribution of immigrants since the turn of the century has almost surely been positive, particularly in regards to immigrants from within Europe but also those from outside. This is at a time when there have been large public deficits. From the point of view of public finance, immigration therefore helps relieve the burden of public service provision rather than adding to it. Of course, over time, young and healthy immigrants will age and draw more heavily on the public sector, but some will return to their place of origin and those who stay will raise children who will help pay for their needs.

These are not the only economic effects of immigration. Suggestive evidence from the US and elsewhere points to the positive contribution free movement can make to innovation, trade and entrepreneurship. None of these issues figure in the discussion within the manifestos but their importance is possibly greater than any of the feared labour market or public service provision effects which do seem to concern the parties.

It is understandable that immigration can give rise to public concern because its problematic aspects may be the most immediately visible. When an immigrant, say, takes a job that might have gone to someone British-born or sits ahead of someone British-born in the wait to see a doctor, this is more easily observed than when the same immigrant creates demand for work by spending their income or helps fund public services by paying their taxes. Failing to address public concern may leave it to grow and will encourage public disillusionment.

Nonetheless, if one looks at opinion survey data, not only in the UK but across Europe, then one has to doubt whether economic issues are at the root of most public disquiet. Although it is the older, less educated voters – those arguably most vulnerable to labour market competition or most dependent on public services – who are least accepting of immigration, the strongest associations with attitudes to immigration are not with opinions about its economic consequences but with responses to its cultural and social impact.

Acknowledgement: This piece was published first at The Geographical.

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