Immigration: Evidence and Opinion

Following-up on my extensive post last week, some more evidence of the ongoing ‘reappraisal’ of the positive growth consequences of immigration that is taking place among economists: Immigration, Jobs and Wages Theory, Evidence and Opinion by Christian Dustmann and Albrecht Glitz.

The book is based on an extensive review of Europe’s migration experience since the second world war, and backed up by new research on the part of both authors.

Amongst other things the book asserts:

* An economy embedded in a competitive international market can always expand production, absorbing new workers by creating new jobs.

* Public debate often seems to be led by the perception that there is a fixed number of jobs in the recipient economy and immigration will lead to more competition for these jobs.

* Knowledge about immigration is low, and policy-making can be distorted by politicians who tend to respond more to popular beliefs than evidence.

* Residents’ perception of immigration is more important for policy than evidence that has been established by socialscientists. As a consequence, policy-makers may react to beliefs based on ill-informed evidence and may, therefore, create inappropriate regulations and legislation

* The fear that immigration reduces jobs for residents is largely unfounded. Although immigration can lead to lower wages for some unskilled workers, the effect is found to be temporary. Instead, immigration is more likely to change the structure of output. An economy reacts by expanding production in the sector that uses unskilled workers more intensively.

Here is the book abstract:

“In most countries of the industrialised world, migration is a highly sensitive political issue. Stories relating to migration appear regularly in the national media and often prove to be central points of debate in electoral campaigns. The causes and effects of migration also feature prominently in political debates in much of the developing world. For domestic residents, who remain unsure of its consequences, rising immigration can generate feelings of fear and anxiety. They suspect that waves of newcomers may reap the rewards of others’ hard work. Economists, in turn, have conducted extensive research in an attempt to establish whether such fears are justified. However, the perceived complexities of economic analysis have meant that the public debate has tended to ignore some simple and fundamental results. This book provides a brief historical overview of Europe’s migration experience since World War II, and presents a simple economic model that shows how immigration can affect the host countries’ economies.”

Perhaps some of this could usefully be borne in mind at today’s Paris immigration meet-up between representatives of France, the UK, Spain Germany and Italy.

Incidentally, one part of the EU observer article is just plain wrong:

“Tougher immigration laws had been passed by the previous right-wing Spanish government in 2003, but Madrid changed its approach in favour of admitting workers in accordance to sector-specific quotas after Socialist Prime Minister Jose Luis Rodriguez Zapatero took over”.

First the law passed by the Aznar government is still in place. Secondly it was this law that provided for sector specific quotas (the so-called ‘cupos’). Thirdly this law was never in-fact rigourously applied: verifiable official data show that during the last three or four years ‘sin papeles’ were arriving in Spain at a rate of about 650,000 (or 1.5% of the total population) a year. Aznar effectively turned a blind eye to this state of affairs, even famously once threatening that any ‘sin papeles’ found to have committed an offence would be expelled from the country immediately (implying that if you didn’t commit an offence you wouldn’t be expelled). Very few people were actually expelled.

What the Zapatero government have done is place some order in an otherwise chaotic situation. The fundamental law has not been changed.

Of course the fact that Spain has had ‘exceptional growth’ and a huge influx of migrants might be considered evidence in support of the above book thesis (a longer post on migration, the euro and Spain’s economic miracle is in the pipeworks).

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “Immigration: Evidence and Opinion

  1. The fear that immigration reduces jobs for residents is largely unfounded. Although immigration can lead to lower wages for some unskilled workers, the effect is found to be temporary. Instead, immigration is more likely to change the structure of output. An economy reacts by expanding production in the sector that uses unskilled workers more intensively.I’ll certainly need to take a look at the book if only to get the hard details on this particular point. Is a distinction being made between jobs and incomes? That seems remarkable. In the United States median real income for a family of four has been stalled for a generation while average incomes have risen sharply. At least one factor in this income dynamics is almost certainly the tremendous level of immigration that has take place over the period.

    “Temporary” may have many meanings. All things are temporary. My life is temporary. Species are temporary.

  2. Ehem, Dave, I wouldn’t necessarily go as far as buying the book, you can get a good idea of the approach from the working papers on Christian Dustmann’s home page:

    I want to make it clear that I am not *underwriting* this research, simply reporting it. Most findings in this area (that of unskilled wages and migration) are contested, so there is no definitive *scientific* answer, not yet, anyway.

    Your point about what exactly temporary means is well taken. The difference between median and average in the argument you refer to has also been a battle ground in the US.

    The bigger point, that migration drives and makes possible economic growth I would continue to defend anywhere.

  3. “Although immigration can lead to lower wages for some unskilled workers, the effect is found to be temporary.”

    This is a finding, not a statement of my opinion, but I think it is entirely plausible finding: normally the route for residents is upward mobility. Probably ‘temporary’ here means a generation.

    If I can add anecdotal observations from Barcelona: Catalunya has probably been one of the areas of Europe which has received most inward migration (proportionately) in the second part of the 20th century.

    Internal migration in Spain in the 50’s and 60’s meant that the population by the 80’s had reached proportions of over 50% recent immigrants or their descendants.

    What happened? The Catalan children studied, and you could find relatively few ‘autoctonous’ catalans in unskilled jobs in the 90’s. Now history is repeating itself. From 1998 to 2005 the population of Catalunya has risen from 6 to 7 million, principally from external immigration.

    The result of this: the grandchildren of what were poor families families from Andalusia and Extremadura now go to university in large numbers, or study vocational training. The new immigrants move in and occupy the jobs vacated in construction or domestic work.

    Obviously to achieve this effect in the labour market you need social mobility.

    I suspect from some of Doug Muir’s fertility points in the last thread on this, that the US may not have the same kind of mobility. If so this is a problem, but one which needs addressing.

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