Does immigration cost jobs?

Polly Toynbee thinks that immigration is bad for low-skilled British workers:

Globalisation does not apply to the service sector, where 20 million people work. It is a term used to disguise the hard truth that GDP growth is irrelevant to those who don’t share in it. GDP per capita is a meaningless statistic that pretends all wealth is equally shared. Class-blind economics conveniently celebrates growth even when it enriches the well-off at the expense if the low-paid.

Ms Toynbee was writing in response a new Social Market Foundation pamphlet by Conservative MP John Bercow, called Incoming Assets: why Tories should change policy o­n immigration and asylum. I can’t find the pamphlet online, but you can read his article in the Independent.  He says

Ministers must reiterate that economic migration is not a burden but an indispensable feature of a successful trading nation.

I have written the following letter to the Guardian – I have no idea if it will be published:

Polly Tonybee reports a fragile consensus that is emerging across the spectrum of mainstream politics that there would be economic benefits from a more open immigration policy  (Of course the wealthy want an immigration free-for-all, October 11, 2005).   Ms Toynbee is concerned about the impact on British workers.

In the nineteenth century, well-meaning people tried to protect jobs by resisting the use of machines. The Luddites were wrong: as mechanization replaced manual labour, there was still plenty of work left to do; and we have all shared in the higher standard of living that increased productivity brought about. Migration is no more a threat to jobs than was the introduction of the steam engine.  Allowing workers to move to where their skills are valued makes us all richer.  This is not just textbook economics: careful studies of the evidence both in the UK and the US find that immigration raises wages of both native and foreign workers.  

Even if, despite the evidence to the contrary, the wages of some workers were depressed by migration, it would not follow that we should close our borders. The proper response would be to redistribute the overall benefits so that everyone shares in the rising prosperity that results. Ms Toynbee also ignores the huge benefits to the migrants themselves, and the transformative impact remittances can have on their families at home.

Sometimes we face a quandary about how much we should be willing to sacrifice to help others more in need.  On this issue there is no such dilemma: we would be better off ourselves, and we would help the world’s poor, by relaxing restrictions on economic migration.

(I didn’t bother to respond to Ms Toynbee’s idea that globalization does not apply to the service sector: try telling that to call-centre workers, data entry operatives and software engineers competing with companies in India and China.  And what about the hospitals offering cosmetic surgery in South Africa?).

If you want more explanation and evidence you might want to take a look at:

  • Chris Dillow at Stumbling and Mumbling
    who makes many of the same points as my letter – in particular, highlighting the likelihood that wages will increase, not fall, as a result of increased migration.
  • This report by the Performance and Innovation Unit
    on the social impact of migration – which finds that migration has had positive effects both on growth and on growth per capita. A one per cent increase in the population through migration is associated with an increase in GDP of between 1.25 and 1.5 per cent.
  • This Home Office report
    on the effects on the local labour market of immigration in the UK, which finds that  there is no strong evidence that immigration has any large adverse effects on employment prospects or wages of existing residents.
  • This new NBER working paper by Ottaviano and Peri looking at the impact of immigration in the United States, which finds that immigration generates a large positive effect on the average wages of U.S.-born workers. (Hat tip: Tyler Cowen)
  • This paper by David Card here at Berkeley, which finds that there is no evidence that immigrants have harmed the opportunities of less educated natives. (Hat tip: Chris Dillow)

You may also want to check out Tim Worstall, and  Talk Politics who makes a somewhat over-the-top comparison between Polly Toynbee’s views and  those of the British National Party.

And finally: hasn’t John Bercow come a long way in a short time?  If I remember rightly, he was once secretary of the Monday Club "Immigration and Repatriation Committee". (Really.)  Good for him for having the guts to change his mind.

7 thoughts on “Does immigration cost jobs?”

  1. You have not raised any benefits in migrating that have not previously been proved incorrect in the comments in TimWs blog, and Im afraid I find your assersions to be without backed up fact; ie ‘textbook economics’ as an argument for migration. My textbook told me about supply and demand. Also your ‘careful studies’ line does not hold any credibility without backed up evidence. You never explain how the ‘redistribution of the overall benefits’ works for the person who is unemployed because an immigrant has taken his job for less wages.
    Your last paragraph tries to turn this issue into a moral one, but I think thats desperation as you know the economic arguments are unfounded.

    Owen replies: The idea that a person has can be unemployed because “an immigrant has taken his job for less wages” is a classic case of the lump of labour fallacy (the mistake of thinking that there is only so much work to be done). You say that my assertions are not backed up: this seems a strange thing to say when I have provided a series of links to studies which both explain the theory and provide the evidence. Please don’t hesitate to return to the comments when you have had a chance to look at David Card’s paper on the US or the PIU report on the UK if there are aspects of those studies that you don’t agree with.

  2. Owen, thanks for your reply and invitation to return my comments.
    I felt the David Card article concerns itself with the low-skilled college ‘drop-out’ cases,
    and isn’t really the issue of concern as low paid jobs are not always low skilled jobs.
    The PIU article, whilst more relevant, is rather generalised in its assertions and I felt it lacked tangible evidence regarding the point why are debating. As stated in 6.29 ‘there is relatively little work in this area{in measuring the effect of immigration on native wages and employment}’, and Zorlu’s figures were not only not relevant, but also so unexplained in this article as to be quite useless.

    The ‘lump of labour’ being an incorrect concept may be true as you say (though the PIU article does not give evidence to discredit it), but Id argue that this could only true in the longer terms, after many years. In the real world, I still say that a migrant taking a natives job will cause that native to have a period of unemployment. Additionally whilst there may be some expansion in that sector, I still believe the extra supply of labour will outstrip the expansion, and thus the wages will decrease.

    In the PIU paragraph 6.32, the article tries to use particular job sectors to justify its argument – I will tell you the truth of what is happening in those sectors;
    HEALTH: Rather than invest in educating British born doctors, Britain has decided it is cheaper to import them. There are a generation of British who have missed out on the opportunity to be a doctor. The supply of nurses has been flooded with migrants and their pay and working conditions are much worse than before. Not many English people can afford to study for nursing for 3 years and incur a student debt, only to get poor wages, on top of the undesirable shift patterns, the increasing violence in the workplace and the overall lack of respect or support. The customers (the patients) have no choice but to be cared for by someone who they don’t neccessarily relate to (particularly for older people) sometimes with an inadequate grasp of the English language (My wife who is a nurse has seen people struggling to understand the dialect of a nurse who is telling them that their loved one has died). The answer would be to make the job more attractive to natives by paying them more.
    EDUCATION: I think we have plenty of people within this country who would make wonderful teachers, but because a degree is necessary, and getting a degree was often not possible for that person due to economic reasons, they are basically being cast aside for qualified migrants.
    IT: My profession. There has been a complete lack of a cohesive training plan in any of the private sector companies I have worked for (something the govt should have encouraged): they see it as far more cost effective to hire already qualified overseas labour. This has resulted in many people being stuck with dinosaur skills, and finding themselves pretty much unemployable. The supply of IT workers by far outstrips demand (talk to any of the recruitment agencies), and yet we are fed this lie that the IT industry is understaffed and we need to import more migrants.
    CATERING: Pretty much a minimum wage occupation, the wages will not become decent until the supply of workers in this sector shrinks.
    AGRICULTURAL LABOUR: What could be more English than to toil in the meadows. Not anymore a choice, as the wages are now minimum, and it largely given to gangs of Eastern Europeans.
    I don’t have a dark political agenda, I am just showing you the honest facts as I see them; I really do not see the benefit of immigrants to the lower paid, and dont like to see this imaginary benefit used as a justification for immigration.

  3. Pingback: New Economist

  4. Dear Owen,

    Following you to your own blog, I see that hsbguzzler continues to refuse to read evidence or arguments put in front of him, and whats more argues that you have a “lack of evidence” when he’s only failed to even glance at the copious amount which you’ve provided. Some people refuse to listen. More’s the pity. Well, you tried your best. Very nice set of links to papers, I must say.

  5. Hi John, Contrary to your suspicions I did read the papers, and I do try to read as much evidence as I can before I make what I believe to be a balanced view. I wasnt convinced by the assertions from the NBER extract, and have given a more detailed reason for disagreeing with the papers that Owen offered on my blog

  6. Hsbguzzler, ah, well then my apologies. Hopefully a calm and rational discussion of the issues can lead to at least fruitful exchange, then.

  7. I will have a look at your sources, but meanwhile, not all the experts agree that immigration benefits the natives of recipient countries. George Borjas, one of America’s leading experts on the subject claims that mass immigration depresses wages for low paid natives and that the effect on living standards as a whole for recipient countries is negligible. See his book: “Heaven’s Door”. Borjas may well have been Polly Toynbee’s source.

    Even your own figures for the alleged benefits are feeble: 1.25 – 1.5% increase in GNP as a result of a 1% population increase ! Stuff it ! This may make me theoretically better off, but economics largely ignores quality of life: concreting over one’s favourite walk through the nearby countryside in exchange for a .25 -.5% increase in wages is an exchange that only dimwits would accept. Nor do I want the import of hoards of Muslims: the world of Islam is backward, undemocratic, prone to kill anyone who disagrees with it (e.g. Salmon Rushdie), it suppresses women, and is homophobic. Islam was an admirable movement a thousand years ago, but nowadays it’s a religion for thickos, as some French politician recently put it.

    As distinct from mass immigration, the movement of a small number of people with specific skills from countries where their skills are in temporary surplus to countries where there is a temporary shortage obviously benefits the World as a whole. Not even the BNP (of which I am a member) object to this.

    Owen replies: I want to make it clear that I profoundly disagree with this comment, which I find offensive and disgusting. I considered deleting it; but decided to leave it, in part to illustrate the point that the argument put by Polly Tonybee is one which may appeal to BNP members, like Ralph, but it appeals to fears and prejudices which most decent citizens abhor. In general, members of the BNP peddling this sort of bile are not welcome here, and I reserve the right to delete similar comments in future.

    On the, substance, it is true that George Borjas has argued that immigrants reduces the wages of local unskilled labour. His claim is that the reason that this effect does not show up in anybody else’s studies – which it doesn’t – is that the unskilled labor moves out of state when low-paid immigrants moving into an area. This claim has been fairly comprehensivly debunked, not least by Francisco L. Rivera-Batiz at Columbia, who shows that migration out of states that receive a lot of immigrants is very small and almost entirely focused on skilled workers. Rivera-Batiz concludes that

    “Although the supply of workers with less than a high school education has been increased by immigration, both theory and empirical evidence suggest that there has been very little, if any, impact of immigration on the wages of high-school dropouts.”

    So if that is Polly Toynbee’s source, it explains why she is wrong.

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