Immigration: some economics

Two quick thoughts on Michael Howard’s proposals to control immigration.

1) Economic theory and evidence suggests that immigration can be good for economic growth; see for example, Paul Levine’s paper, “The economic impact of migration: a survey” downloadable here. What’s more, there’s no evidence that immigration hurts the employment prospects of indigenous workers. Research by Christian Dustmann has found that “higher immigration appears to be associated with higher wage growth in the currently resident population…fears of large and negative employment and wage effects on the resident population are not easily justifiable.”

This suggests that if, as Mr Howard claims, “immigration controls are essential for good community relations” there’s a price to be paid for achieving such relations.

Now, I’ve said before that economic growth isn’t terribly desirable, so this might (only might) be a price worth paying. But let’s at least acknowledge the trade-off.

2) Research by Tim Hatton has found that a major cause of rising immigration into the UK has been the rise in wage inequality. A high return on skills attracts skilled workers into the country.

Can we therefore look forward to Mr Howard lamenting increasing inequality?

Comments

[Blimpish]

Yes, but then there's the theory that high immigration undermines public support for doing anything about inequality (people are happier to redistribute to people like themselves - hence, no meaningful global redistribution is ever mooted). So maybe those who 'favour' wage inequality should support immigration and those who are against it should be opposed. Speaking as a Right-winger, I have no in-principle problem with sensible redistribution (i.e., that doesn't undermine incentives for work and personal responsibility).