Friday, 5 January 2007

A slap in the face for Migration Watch

Yesterday I reported that Migration Watch had produced figures claiming that the economic impact of immigration from the 2004 EU accession countries is worth just 4p a day per UK citizen or “less than the equivalent of a small Mars bar a month”.

As I noted in my piece yesterday, Migration Watch’s figures for how much each person has benefited do not correspond with those from the Government, the London School of Economics or the Confederation of British Industry.

Today David Blanchflower, one of the nine members of the Bank of England’s Monetary Policy Committee, hit out at Migration Watch, pointing out that immigration has been a vital tool in keeping a lid on inflation (which, though rising under Gordon Brown, is still under control). Immigration “has tended to increase supply by more than it has increased demand in the UK (in the short run), and thereby acted to reduce inflationary pressures.”

As for the oft-cited error that immigrants are stealing our jobs or pushing down wages, this is nonsense. Mr. Blanchflower and the two Bank of England economists with whom he co-authored the report, write that “empirical literature from around the world suggests little or no evidence that immigrants have had a major impact on native labour market outcomes such as wages and unemployment.

But the impact of these immigrants on employment has not been neutral. Oh no! It has in fact reduced joblessness: “There seems to be broad agreement that immigration is likely to have reduced the natural rate of unemployment in the UK over the past few years.”

So, just to get this straight, not only have these hard-working taxpayers added 0.5 per cent to GDP and paid £2 billion in taxes in 2005, but they have also kept both unemployment and inflation lower than they would otherwise have been.

Not only does that leave egg on the face of Sir Andrew Green, but it also demonstrates that the Government were stupid not to repeat the trick by allowing Bulgarians and Romanians to join our economy based on need and not bureaucratic bean-counting.


Kit said...

This does seem to be a case of having your cake and eating it.
This seem contradictory:
"reduce inflationary pressures" v "no evidence of major impact...such as wages"
How else does immigration hold down inflation?

Also, the claim that immigration reduces unemployment leaves me sceptical. I would say jobs have been created that would not have existed. Jobs that are dependent on low wages e.g. hand car washing. This has had the effect of reducing the proportion out of work but would have had little effect on native unemployment rates.
Additionally, unemployment rates have increased in areas of high immigration like London.
Even after saying all that the economic case for immigration is solid but immigration is more a social and cultural issue.

Tristan said...

Its easy to see why unemployment is reduced: immigrants don't just work, they consume.
They spend the money they earn from working. On people who provide other services or goods.

Its interesting that critics of immigration then fall back on 'social and cultural' issues when economic arguments are demolished? Britain has a proud history of immigration, it has benefited our society and culture when we've welcomed people.

Kit said...

Immigration is a "social and cultural" issue. The economic argument does not carry much weight with most people. Their main concern is social cohesion. Then common values and shared history.
I believe over-egging the economic case for immigration, as David Blanchflower has, just makes people suspicious.
(I think I have a cake fixation at the moment)