Transcript What the Immigrants Can Do for Us

What the immigrants can do for
us, or the economic consequences
of Mr Blunkett.
David Coleman
Robert Rowthorn
Presentation given at the Centre for Research in the Arts,
Humanities and Social Sciences, Cambridge, 5 July 2004.
New Labour, new immigration
policy
• Previous policy put ‘restriction of settlement’ first,
subject to ‘needs of labour market’ and openended ‘obligations’. ‘Race relations’ prominent.
• Result - more immigration since 1980s.
• New policy takes positive view of immigration,
still subject to controls (especially asylum, focus
of much legislation). Social benefits of ‘diversity’.
• Result - even more immigration since 1997, with
‘no obvious upper limit’.
Current UK migration situation
• Some (two-way) migration normal in advanced
societies.
• Work - related migration for highly skilled long
standing, was not very controversial.
• Most immigration non-labour; asylum 25? percent
net inflow. Net inflow 2003 151,000; foreign
+236k, UK -85k.
• Easier entry for non-labour migration, expansion
of low-skill work permits, working holidaymakers
• Two revisions of migration estimates since 2001
census
Net Immigration to UK (2 definitions) 1981-2002 (thousands)
250
200
100
50
0
-50
Net balance corrected
2001 census-based (re-revised)
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
-100
1981
thousands
150
Net migration to UK by citizenship
300
Net migration by citizenship, UK 1984-2002 (thousands). Source ONS.
250
200
British
150
nonBritish
100
50
0
1984
-50
-100
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
The case for more immigration positive and negative, theoretical
and empirical
•
•
•
•
•
•
•
•
•
Demographic benefits - future workforce, ageing.
Essential for economic growth.
Entrepreneurial benefits.
Fiscal benefits.
Fill skills shortages, keeps NHS going, IT needs.
Perform ‘dirty jobs’.
‘London / UK would collapse without them’.
Cultural, social benefits of ‘diversity’.
All with no damage to ‘native’ interests.
Three related demographic
problems behind argument for
more immigrants.
• End of population growth, possible decline
• End of growth and possible decline in
labour force and of young labour force
entrants; failure of economic growth.
• Population ageing leads to crises in
pensions and old-age care.
Immigration can solve all that:
• Immigration cannot be stopped anyway.
• Will sustain or expand population size.
• Provide rejuvenated and expanding
workforce.
• Rectify ageing population while saving
natives from trouble of reproduction.
• Everyone gets what they want and lives
happily ever after.
Immigration as demographic
salvation?
• Do we need to be saved? Why should ‘no decline’ targets be met
(UN 2000)? Is zero growth or decline axiomatically undesirable?
• Immigration can keep population, or workforce size,
approximately constant.
• But that can require very large inflows; and adjustment difficult.
• Immigration can only 'solve' population ageing with large and
infinitely increasing population increases.
• Given sub-replacement fertility, migration to maintain constant
size must eventually replace original population with immigrant
population. Does a society ‘save’ itself that way?
• ‘Economism’ and ‘Demographism’ tend to ignore environmental
and social problems of immigration and population growth.
UK population - no decline imminent
UK population projections 2002-2071, 2002-based (millions). source: GAD
75
2002 Principal projection
2002 'High' migration
(163k)
2002 Natural change
70
2003 Principal projection
65
60
55
2071
2066
2061
2056
2051
2046
2041
2036
2031
2026
2021
2016
2011
2006
2002
50
Projected population growth by component,
United Kingdom, 2002-2031, thousands.
GAD 2004.
High
migration
variant
Principal
projection
Low
migration
variant
Total population increase 2002 2031 (thousands)
7,822
5,606
3,389
Resulting from:
Assumed net migration
5,500
3,790
2,080
966
966
966
2,139
-783
1,633
-783
1,126
-783
97.7
88.8
96.7
84.9
94.6
76.8
Natural change with no migration
Additional natural change from
net migration
Other changes (UDC)
Migration effect (%)
Migration effect without UDC
Source:
Entry to working age population
Population aged 20-24, selected European countries 2000 2050 (2000 = 100). Source: United Nations, GAD.
120
115
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
2000
2005
2010
2015
Norway
Italy
UK (GAD 2002 PP)
2020
2025
France
Spain
2030
2035
2040
Germany
UK (UN)
2045
2050
Projection of UK population aged 15-64
UK population aged 15-64, 2002/6-2051. Source: GAD 2002, 2003 Principal projections
41
40
39
38
37
36
35
34
33
32
UK population 15-64 2002 PP
UK population 15-64, 2003-based
2051
2046
2041
2036
2031
2026
2021
2016
2011
2006
2002
31
Annual net migration 'required' to preserve 1998
population and workforce, UK 1998 - 2100
400
300
250
200
150
100
50
0
-50
-100
15-64 as in 1998
1998 pop
2090-9
2080-9
2070-9
2060-9
2050-9
2040-9
2030-9
2025-9
2020-4
2015-9
2010-14
2005-9
2000-4
-150
1998-00
annual net migration (1000s)
350
Population ageing: an
unavoidable destiny
• Population ageing here to stay – an
irrevocable feature of mature society.
• Birth and death rates for a younger
population gone for good.
• With constant vital rates, population agestructure will eventually stabilize.
• Longer life means even older populations,
but changes meaning of ‘old age’.
Potential Support Ratio, UK 1980-2100
GAD PP 1998-based. Population Trends 103
Figure 7 Ratio of persons aged 15-64 to those aged 65 and over, United Kingdom, 1980-2100
See Box 4 for key
4.5
Projected
4.0
Ratio
3.5
3.0
HF - HM
HF - PM
HF - LM
PF - HM
PP
PF - LM
LF - HM
LF - PM
LF - LM
2.5
2.0
1.5
1980
2000
2020
2040
Year
2060
2080
2100
No limits to migration?
Immigration and the PSR
Population Trends 103
Ratio
Figure 8 Support ratio under alternative assumptions, United Kingdom, 1980-2100
(a) alternative migration assumptions
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1980
Projected
Long-term TFR: 1.8
Long-term annual net inward migration: as shown
1,000,000
500,000
250,000
95,000 (principal)
Zero
2000
2020
2040
Year
2060
2080
2100
6
5
Net Annual Immigration required to
maintain UK Potential Support Ratio, 2000 2100 (millions)
3
2
1
2100
2080
2070
2060
2050
2040
2030
2025
2020
2010
2000
0
1998
millions
4
UK population size required to maintain given PSRs by immigration, 2000
- 2100 (millions)
350
300
250
200
150
100
50
PSR 3.0
PSR 3.5
PSR 4.22
2100
2080
2060
2050
2030
2025
2020
2010
2000
0
The economic arguments for
mass migration –labour market
and macroeconomic
•
•
•
•
Increases GDP
Fiscal benefit
Essential for labour needs
Does the natives no harm
That ‘0.5% GDP growth’
• Rounded up from increase of 0.4% (not 0.5%) in
population of working age.
• Assumes that output rises pro rata
• But what matters is GDP per head
• Ignores contribution of immigration to population
growth : 0.25%
• Increase per head therefore 0.15% or £25 per year
= 48p/week
• Ignores lower workforce participation and
displacement effect.
Population growth does not make
you rich (western countries 2000)
Relation between GDP growth per head and population growth, 2001-2,
Western countries and Japan (both percent)
4.00
y = 0.0957x + 0.6371
R2 = 0.0014
GDP growth per head, 2001-2 (percent)
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
0.00
-0.50
0.20
0.40
0.60
0.80
1.00
1.20
-1.00
-1.50
Population growth 2001-2 (percent)
1.40
1.60
1.80
2.00
GB, Workforce participation and unemployment
Economically active
all ages over 16
ages 15-59/64
Unemployed
Source: Dobson et al. 2002
By citizenship, 2000 (%)
UK
Foreign
64
59
80
69
5.5
8.5
United Kingdom 2002. Economic activity
by ethnic minority status
all birthplaces
Economic Employment Unemployment
Workless
activity (%)
rate %
rate %
households %
age 16-59/64
White
British
Other white
All ethnic minority
Mixed
Black Caribbean
Black African
Indian
Pakistani
Bangladeshi
Chinese
age 16-59/64
80
81
77
66
71
77
64
75
54
47
65
age 16+
76
77
72
58
58
66
56
69
45
41
60
Source: Labour Market Trends March 2003 p.113 ; April 2003 p.167 (Labour Force Survey)
Note: Not all groups are shown. See source. * = Pakistani, Bangladeshi together.
by ethnic group of ref. person
5
5
6
12
18
14
13
8
15
14
-
16
35
25
35
27*
25
Fiscal effects - many studies, unclear
message
• Variety of approaches - static and dynamic, national and
provincial.
• Variety of effects - educated , skilled immigrants, mostly
from rich countries, can make large contribution.
Unskilled immigrants, mostly from poor countries, may
not. Mixed, small overall effect (e.g. Sweden -$718) e.g:
• Net present value in US - high skill+$96k, low skill -$36k
(Storesletten 2000). Annual fiscal effect Denmark: rich
countries +$1650 poor countries -$8546 (Wadensjo ‘99).
• Emigration usually (but wrongly) ignored.
• Fiscal analysis relates to limited, direct effects only.
Net fiscal contribution of immigrants
United States
surplus ($bn)
% GDP
Borjas 1994
-16
-0.20%
Huddle 1993
-40
-0.60%
Passel 1994
27
0.40%
Lee and Miller 1998*
24
0.30%
Lee and Miller 1998**
67
0.95%
Lee and Miller 1998***
-76
-1.10%
* (debt interest and public goods costs not allocated to immigrants)
** (increased taxes to balance budget, no more spend on immigrants)
*** (taxes constant, debt interest and public goods allocated pro rata)
Switzerland 1990
Weber and Straubhaar 1996
UK 1999/2000 Gott and Johnson 2002
Denmark - Wadensjo 1999
from developed countries
poor countries
annual fiscal contribution
$460
0.20%
£42
0.25%
$1650
-$8546
Alternative Estimates of the Fiscal Impact of
Migrants in the UK in 1999/2000.
Original
Source: Rowthorn
Tax
Spend
Balance
£ bn
31.1
£ bn
28.8
£ bn % GDP
2.5 0.27
% p c*
28.8
0.4
0.04
0.06
-0.4 -0.05
-0.06
0.28
0.36
0.36
Adjustment 1
Corp’n tax
Budget Balance
After 1st adj.
-0.8
-1.3
29.1
Adjustment 2
Home Office**
After 2nd adj.
0.7
29.1
29.5
Adjustment 3
Defence
-1.9
-1.1
Debt interest
After 3rd adj.
29.1
26.6
2.6
Note: totals may not add because of rounding errors.
* individual expernditure, per head
** Immigration and Citizenship
Problems of ‘labour migration’
• Most migration is not (formal) labour
migration.
• Foreign / minority unemployment rates high
in first and second generation; workforce
participation rates low.
• Increasing evidence that as a whole
immigration damages interests of native
workers (Dustmann, Hatton and Tani)
Gross inflows by selected purpose of
migration, 2001.
Source: OECD 2003 fig 1.3
Workers
0
Australia 2
Switzerland
United Kingdom 3
Portugal
Canada
Norway 4
Denmark
France 5
United States 6
Sweden 7
10
20
Family reunification
30
40
50
60
Refugees
70
80
90
100
Workforce Participation Rate 2000-1.
Source: OECD 2003 table 1.14
90
85
80
75
70
65
60
55
50
45
40
35
30
Denmark
France
Germany
Nationals M
Netherlands
Foreigners M
Switzerland
Nationals F
Foreigners F
Italy
Spain
Unemployment Rate 2000-1.
Source
OECD 2003 table 1.14
30
25
20
15
10
5
0
Denmark
France
Germany
Nationals M
Netherlands
Foreigners M
Switzerland
Nationals F
Foreigners F
Italy
Spain
Net migration for purposes of work, UK 1992 - 2001
thousands
year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Inflow
41
40
41
52
51
66
62
83
90
105
120
102
Outflow
57
59
77
56
70
81
75
64
70
95
83
100
Balance
-16
-19
-36
-4
-18
-15
-13
19
20
10
37
2
Source: International Passenger Survey,
ONS Series MN table 3.9
Strategic problems of labour
migration
• ‘Need’ for immigrant labour may reflect and
perpetuate poor conditions and lack of training.
• Part of ‘need’ arises directly from growth of
immigrant population itself; espec. London and
SE..
• Immigrant labour distorts economy; creates
‘dependence’, maintains unsatisfactory enterprises
with poor conditions (e.g.NHS).
• Permanent population acquired for transient jobs
(Bradford, Oldham, etc.)
• Excessive priority to demands of employers.
Effects on employment and wages
• Economic theory represents depressing effects of
immigration on wages as a counter-inflationary
benefit. Some studies argue that this does not
happen. But:
• UK evidence: higher unemployment ( 2% - 6% per 10%
immigrant increase), + higher wages (Dustmann et al).
• US evidence: 1980 - 2000 more jobless among low-skilled
(high school dropouts), reduced wages 7% (Borjas 2004)
• EU: 83 native jobs lost per 100 additional immigrants
(Angrist and Kugler 2003)
• Immigration to South depresses in-migration from areas of
high unemployment in N (Hatton and Tani 2003).
Further considerations
Most studies including UK (e.g. Gott et al. p. 29) ignore
other likely cost differences:
Health
Education.
Housing and land.
Crime
Race relations
Asylum
Remittances
Additional infrastructure (water, roads), congestion
Non-economic effects on rural and urban environment
Ethnic and social change
Effects of different migration assumptions on
household formation, 1996 - 2021.
Assumes each extra 40k immigration yields 450k households by 2021.
A
B
0 -731
65
0
103 428
154 1001
C
D
3069
0
3800 731
4228 1159
4801 1733
E
0
24
38
56
F
-19
0
11
26
Zero migration
1996 projected level
2002 projected level
2001 actual level
A Net immigration assumption
B Additional dwellings by 2021
C Total projected dwellings
D Projected dwellings due to immigration above zero level
E % projected dwellings due to immigration above zero level
F % projected dwellings due to immigration over 1996 assumption
Projected growth of population of immigrant or
foreign origin 2000 - 2050 as percent of total
population
35
30
20
15
10
5
Germany medium variant
Netherlands base scenario
UK high migration
USA medium variant
Denmark base scenario
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
0
2000
percent
25
Projected growth of population of immigrant or foreign origin
2000 - 2050 as percent of total population, with zero net
migration
35
30
20
15
10
5
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
0
2000
percent
25
Germany medium variant
USA medium variant
Denmark base scenario
Germany zero mig
US zero mig
Denmark zero mig
Conclusions
• Immigrants cannot, on balance, do much for us; but UK
can do much for immigrants.
• UK future population futures relatively benign .
• ‘Replacement’ migration for total and working-age
population difficult, for age-structure a fantasy.
• Economic consequences of Mr Blunkett as conventionally
measured are marginal, probably negative in UK; any
benefits accrue to elite and to immigrants.
• Broader economic costs probably more severe.
• Social, political, environmental costs much more important
than economic considerations?
• What problems do we have, to which large-scale migration
and its discontents could possibly be the answer?
• Why does government persist in so risky and unprofitable
a programme?