Jonathan Portes, director at the National Institute of Economic and Social Research, takes a look behind the government’s tough talk on immigration.
Immigration is a highly charged political issue in most developed countries, including the UK.
But the economic benefits are often overlooked. Skilled immigration is particularly beneficial, but lots of evidence suggest that immigration overall – including that from the new members of the EU – is good for the UK economy, increasing not just the overall level of output, but output per person.
Overall, immigrants tend to fill gaps in the labour market, and contribute more in taxes than they consume in public services. There is not a single serious economic study that suggests immigration has had any significant impact on the employment of British workers. It may have had some effect on wages, but not very much.
But more important than the short-run effects of immigration is how it impacts the economy over the long term. Immigrants bring new ideas; they both compete with natives and complement them. Not only does that help growth in the short term, but evidence from the US suggests it boosts productivity and innovation over the longer term – exactly what the economy needs.
Unfortunately, the government is introducing a number of policy changes that will make it more difficult for both skilled workers and foreign students to come to the UK. Analysis by the government’s Migration Advisory Commmittee, the Treasury, and the Home Office all suggest that these changes will be bad for growth and will cost the government money – hardly sensible at a time like this. Instead, we should recognise that the UK will continue to need immigration if it is to take advantage of globalisation.