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Thursday, March 06, 2014

UK Govt migration report: So does immigration have an impact on jobs?

Open Europe's chosen title for migration was
"tread carefully"
The UK Government has (finally) published its review of evidence on the effects of migration on the jobs of "UK natives." (Note this is not the long-awaited Balances of Competences report on EU free movement, which has yet to be published).

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.


Anonymous said...

Migration provides a larger supply of cheap labor for the middle class to compete with.

The answer is obvious but no one wants to say it because it is politically incorrect.

Jesper said...

About this:
"Clearly migration has a wider ranging impact such as lowering prices for consumers"

Is the lowering of prices for consumers, deflation, to be seen as a good or a bad impact of migration?

Rollo said...

It makes an enormous difference. We have record youth unemployment? Why? because it is easier to take on a tradesman from the EU than to jump through all the hoops needed to take on and train a british boy or girl. And it is very easy to find a white van man with an East European accent to take on all sorts of building work for cash.
It is not the people in the upper reaches of society that suffer: it is the people at the bottom of the food chain; and of course the tax man. All this robs jobs but is invisible to politicians.
And these immigrants repatriate much of their earnings; a permanent drain on our economy.

Anonymous said...

Clearly the eussr doesn't want to admit to making any mistakes it is as in the words of d'estaing when talking about the constitution "perfect in every detail", it can't accept that mass migration is going to mean a cut in the amount of jobs available for nationals, because that would show the stupidity of unfettered migrations. The pressure placed on the economy of extra unemployed, and housing needs far outweigh any perceived gain.

jon livesey said...

This piece is fundamentally confused. The principle in question is whether a member state is allowed to control its own borders.

It could happen that at one point in time immigration isn't impacting domestic employment and that at another it is.

The possibility that at some point in time it isn't, is not an argument against a member state controlling its own borders.

Jesper said...

It might be time to come clean and define what is considered to be 'low-skill' jobs.

IT has transformed many jobs and professions quite a lot. A job that once might have been high-skill is now not that complicated and might be best described as medium- or even low-skill.

I've got a suspicion that the divide into low-, medium- and high-skill is poorly defined and out of date. What is the divide used by authors of reports such as the one referenced?

Maybe rephrasing might make it easier to get an answer: Which professions should not fear the additional competition of increased migration?

Anonymous said...

"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."

Of course the economy isn't strong and the government is deliberately leaving the unemployed sick and disabled with no means of support to reduce the unemployment figures, when there is a surplus of people wanting jobs it serves to drive down the salaries and leave more people out of work, simple mathematics.

christhai said...

When someone who is not a native of a country which is already heavily overcrowded, passes a Law which permits hundreds of thousands, even millions of people to go there to 'find a better life' it is WRONG, WRONG WRONG.

Only the people who live in a country can permit MORE people to come there.

IF as the "experts" say, Immigration is GOOD for a Country - then let that Country open its doors wider.

If at any time an influx of people is NOT GOOD for that country - then let that Country narrow the opening of its doors to admit fewer people.

Frankly, some Luxembourger or Portuguese, living the very High Life and insulated against the CONSEQUENCES of his passing these ridiculous Laws, is NO LONGER acceptable.

If the EU insists on applying their Laws to OUR country then it is time for armed revolt.

EmilyJacob said...

I totally agree with you Christhai. you said a big truth.

Anonymous said...

Without any doubt migration provides a larger supply of cheap labor for the middle class to compete with, lets not forget about the possibilities to outsource work nowadays. In complex we inevitably have negative influence for native job markets not only of Britain, but other European countries and the population growing poorer. Native citizens nowadays often fail to find full-time job and have to make their ends meet somehow, even by means of short term money loans on the web.