Immigration and wages in UK

Much has been made of the research by Sir Stephen Nickell on the impact of immigration on wages, in which he suggested that there was “a small negative impact on average British wages.” That was specifically for semi/unskilled workers.

The impact is, however, infinitesimally small! As Portes showed, the 1% fall in the wages of low-skilled workers due to immigration was spread over a period of eight years.

There was no negative impact found from immigration on the wages of skilled workers and professionals.

Wages have fallen because of various factors, including, extreme pay inequality, lower bargaining power of workers/employees, public sector’s pay freeze, the financialisation of the economy, occupational changes, NOT immigration.

For some reading, here is the Resolution Foundation’s report; and the following economists:

Blanchflower & Machin – ‘Falling real wages’

Mazzuccato – ‘Definancialising the real economy’

Pessoa & Van Reenen – ‘Wage growth and productivity growth’

Machin & Costa – ‘Real wages and living standards in the UK’

Costa & Machin – ‘What’s happening with real wages and living standards in the UK?’

Bell & Van Reenen – ‘Extreme pay inequality’

Posted in economy, EU, labour market, migration, wages | Leave a comment

Net Migration to UK Falls

Net migration to the UK was estimated to be 248,000 in 2016, a fall of 84,000 from 2015. This is mostly to do with an increase of 40,000 EU citizens leaving the country.

The net migration change was driven by a statistically significant increase in emigration up 40,000 from 2015, mainly EU citizens (117,000, up 31,000 from 2015) and a decrease of 43,000 in immigration (not statistically significant).

Net migration is the difference between people coming to the UK for more than a year, and the number of people leaving the UK for a year or more.

Immigration from EU8 states – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia – was down by 25,000 to 48,000, while those leaving the country increased by 16,000 in 2015, to 43,000 last year.

These resulted in the smallest net migration estimate of 5,000 for this group of nations since they joined the EU in 2004.

Here is the report of the Office of National Statistics.

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The true effect of migration: growth, higher wages, lower taxes

Closing borders does NOT reduce migration: Closing borders, as also shown in a report by the UK Home Office, would have the effect of diminishing circular EU migration. EU migrants, now able to go to another country, go back to their country of origin and back again to another country, would not be able to do so anymore. This is likely to lead EU migrants to become permanent rather than go back to their country of origins.

This is also evidenced by research in the DEMIG (Determinants of International Migration) project at Oxford University, showing that “immigration restrictions bring down return migration by roughly the same extent as immigration, making the effect of restrictions on net migration very small or insignificant. In order words, borders restrictions have the tendency to push migrants into permanent settlement.”

Professor Hein de Haas from the International Migration Institute at the University of Oxford has a great post assessing the evidence of whether a possible ‘Brexit’ would lead do a decrease in the levels of migration. Here are some highlights:

“The recent increase in immigration to the UK is largely the result of a growth in labour immigration, which reflect increasing labour demand and falling unemployment in the UK. In general , levels of immigration are primarily driven by economic growth and labour demand rather than by immigration regulations – no matter how much politicians would like voters to believe that they are in control.”

See more on this here: Brexit unlikely to curb migration.

Migrants do not take jobs because there is not fixed number of jobs in the economy: The assumption that migration means fewer jobs for native workers is generally referred to as ‘the lump of labour fallacy’. Migrants spend money buying goods and services creating growth and new jobs. See evidence from Jonathan Portes and from the LSE. Also, Hollie McNish rapping based on research.

Skilled migrants raise productivity and wages: migrants to the UK are generally more skilled than the native population. This means that they raise productivity and wages. Here is the evidence. Also, recent work by the OECD finds that halving UK net immigration rates would reduce UK productivity growth by 0.32% per year.

Large increase in immigration has not significantly harmed the job and wage prospects of British workers. Here is the evidence from the Home Office. As researchers at the LSE explain wage stagnation is not due to migration.

“If we look at employment rates of the UK-born over the last four decades since the last EU referendum, there is little relationship with EU immigration. Although EU immigration rose during 2008-10 when employment rates fell, immigration also rose in the last five years when employment rates recovered. Similarly, although wage rates were falling in the period 2008-14 when immigration was rising, wages were still going up in the period 2004-08 as well as in the last year. The problem of falling wages was due to the financial crisis and austerity – not to immigration. … To see if prospects for less skilled UK nationals are associated with EU immigration, we looked at the changes in pay and job rates of the low educated. Our results are unchanged: EU immigration has not harmed local British workers.

Migrants pay more in taxes than they take in benefits. Researchers at Oxford have found that Eastern European immigrants paid in about £15 billion more than they took out in public spending and benefits in the decade up to 2011 (while UK nationals received more than they put in over the same period). Researchers at UCL show that migrants since 2000 have made a net contribution of £25bn.

 

Posted in borders, economy, EU, global, labour market, lump of labour fallacy, migration, skills, statistics, summary, UK, unemployment, wages, welfare/NHS | Tagged , , , , , , , | Leave a comment

Europe sees rise in unaccompanied children seeking asylum

Pew Research Centre reports that there has been a rise in unaccompanied minors seeking asylum, with half of them coming from Afghanistan.

Unaccompanied child migrants seeking asylum in Europe
“Since 2008, about 198,500 unaccompanied minors have entered Europe seeking asylum, according to data from Eurostat, the EU’s statistical agency. The first significant jump came in 2014, when the number of unaccompanied minors seeking asylum almost doubled compared with 2013, from 13,800 to 23,200. A year later, in 2015, the total quadrupled to a record 96,000. The 2015 total alone accounts for nearly half (48%) of unaccompanied minors that have entered Europe since 2008. Nearly 7% of all first-time asylum applications in 2015 were from unaccompanied minors, the highest share since data on accompanied minors became available in 2008. …

Since 2008, about four-in-ten of Europe’s unaccompanied minors – 76,700, or 39% – have traveled from Afghanistan, about a 3,000-mile trip. That makes Afghanistan by far the single largest source country of unaccompanied minors in Europe since data became available. Unaccompanied minors also come from other far-flung places. Some 13,200 arrived from Somalia and another 11,600 have arrived from Eritrea since 2008. Travel from both countries requires navigating treacherous terrain and a perilous journey across the Mediterranean Sea. Other top countries of origin include places closer to Europe, including Syria (19,300 arrived since 2008) and Iraq (9,100), while some source countries are in continental Europe, including Albania (3,100) and Russia (2,700). …

Unaccompanied minors do not always apply for asylum in the first European country they enter. Many travel north through the continent. Between 2008 and 2015, almost a third (58,500) of all unaccompanied minors seeking asylum in the European Union, Norway or Switzerland have sought asylum in Sweden. Another 29,600 have applied for asylum in Germany (15%) and 17,800 (9%) have applied in the United Kingdom.

But the eight-year totals mask a change in destination countries among unaccompanied child migrants applying for asylum in Europe. In 2015, Sweden received more than a third (37%) of European unaccompanied minors, up from 11% in 2008. By contrast, the United Kingdom declined dramatically as a destination for unaccompanied child migrants. In 2008, 32% of unaccompanied minors sought asylum in the UK, a share that dropped to just 3% in 2015.”

Read the full article here.

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Welfare does not attract migrants

Corrado Giulietti (IZA) found that contrary to the welfare magnet hypothesis, empirical evidence suggests that immigration decisions are not made on the basis of the relative generosity of the receiving nation’s social benefits. Even when immigrants are found to use welfare more intensively than natives, the gap is mostly attributable to differences in social and demographic characteristics between immigrants and non-immigrants rather than to immigration status per se. Moreover, evidence in some countries suggests that immigrants exhibit less welfare dependency than natives, despite facing a higher risk of poverty.

Here’s the research.

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Legalisation of migrants increases income of native workers

Economists Andri Chassamboulli and Giovanni Peri have found that:

“increasing deportation rates and tightening border control weakens low-skilled labor markets, increasing unemployment of native low-skilled workers. Legalization, instead, decreases the unemployment rate of low-skilled natives and increases income per native.

Here’s the abstract of their paper:

A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the 2000–2010 period. As immigrants – especially illegal ones – have a worse outside option than natives, their wages are lower. Hence, their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effects our model shows increasing deportation rates and tightening border control weakens low-skilled labor markets, increasing unemployment of native low-skilled workers. Legalization, instead, decreases the unemployment rate of low-skilled natives and increases income per native.

Link to paper.

Posted in economy, global, lump of labour fallacy, Mexico, migration, unemployment, US, wages | Tagged , , , , , | Leave a comment

Migration, housing & planning

This paper by John Burnett of the Institute of Race Relations examines the likely impact of the recent UK legislation on housing, planning and migration (Housing and Planning Bill 2015 and the Immigration Bill 2015) on the inner-city communities of multicultural Britain.

The discussion paper argues that:

• The legislation appears aimed at a rapid social restructuring. This culmination of attempts by Labour-and Conservative-led governments to codify social entitlements in Britain, link rights to responsibilities and exclude certain categories of people from rights altogether, will see multicultural neighbourhoods increasingly broken up and displaced.

• Extremes of poverty in inner-city neighbourhoods will be exacerbated, leaving children among those increasingly vulnerable to destitution. Local authorities will have no duties to assess provision for Gypsy and Travellers when assessing housing need.

• The extension of the ‘hostile environment’ principle which underlies immigration policy will lead to a deterioration in the quality of life for BAME communities. A climate of suspicion and mistrust will develop as those from BAME communities are forced to prove immigration status before receiving services.

• Vast new powers will be accumulated by government agencies responsible for administering the legislation. At the same time, mechanisms to scrutinise and hold measures which will expand the powers of immigration officers yet further, continue a commitment to integrating immigration enforcement within mainstream services and criminalise undocumented workers, rendering them ever more vulnerable to exploitation.

• The housing bill includes measures which will end secure tenancies, force the sale of property – transferring public land into private hands – and ultimately force rents higher in an upward spiral. Whereas the former is focused on addressing who can reside in the country, the latter addresses who can reside where. And in doing so, the impact of the act on the poor and marginalised will be devastating. The elderly, victims of domestic violence and those with health problems will be left vulnerable by the phasing out of secure tenancies. Some 60,000 people, it is estimated, may be unable to remain in their home as a result of ‘payto-stay provisions’. Families will be separated. People in receipt of disability allowance, for example, may be penalised.

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