|Open Europe's chosen title for migration was |
This report focused purely on the labour market. Clearly migration has a wider ranging impact such as lowering prices for consumers, potentially boosting economic growth, placing greater pressure on public services, and posing the challenge of integration within communities.
So what does today's report conclude?
Well, unsurprisingly, it found that the effects of migration are very difficult to determine - the review is more a summary of existing research than an attempt to come to a hard conclusion. When we looked at EU migration, we also found it difficult to come to decisive conclusions but it is clear that the impact of migration on the labour market is much more complex than the intuitive view that there is a fixed number of jobs in the economy.
There are some interesting findings in today's report. In general it found:
"There is relatively little evidence that migration has caused statistically significant displacement of UK natives from the labour market in periods when the economy is strong."With regard to EU migration specifically, the Government's report concludes that:
"To date there has been little evidence in the literature of a statistically significant impact from EU migration on native employment outcomes, although significant EU migration is still a relatively recent phenomenon and this does not imply that impacts do not occur in some circumstances."This is consistent with the view in economic theory that: "In the long term, it is argued that there is no negative impact on wages or employment of native workers as, over time, economies find ways to adjust to a stable equilibrium." But this overall impact can however mask temporary impacts or impacts on sections of the labour force. They argue for instance that:
"Where displacement effects are observed, these tend to be concentrated on lower skilled natives".
And their evidence also points to variations in impact at different points in the economic cycle suggesting:
"that the labour market adjusts to increased net migration when economic conditions are good. But during a recession, and when net migration volumes are high as in recent years, it appears that the labour market adjusts at a slower rate and some short-term impacts are observed."So was Theresa May wrong to claim UK natives' jobs were lost due to migration? There has been a lot of discussion about the veracity of the Migration Advisory Council (MAC)'s analysis the Home Secretary relied on to claim 23 UK natives' jobs were lost for every 100 non-EU immigrants. Today's report interestingly includes what is politely called "additional testing" of the MAC results to see if this was indeed true. The additional testing "revealed that the main result remains robust to a number of tests." But they found that: "When data from part of the period of economic downturn (2009 and 2010) were omitted, the impact of non-EU migration was not found to be statistically significant."
This corresponds to a low point in the economic cycle and bears out an observation we made in our report that, when jobs were being lost in the economy during the recession, UK natives lost out disproportionately but that otherwise the effects of migration are probably about neutral. This could perhaps be due to the places where jobs were being lost in the downturn (finance and traditional industries) and created or retained (other service industries).
So was Theresa May right? In the narrow sense, yes. The study highlighted that migration can disrupt the labour market in the short term. And it is this issue - that the neutral or positive long-term aggregate effects of migration can mask short-term losers, such as those who face greater competition in a recession or specific groups such as the low skilled - that continues to make migration such a politically sensitive issue across the entire political spectrum.