Home truths on immigration

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Some years ago, I suggested a five-year experiment in which all immigration controls were lifted and the distinction between asylum seekers and economic migrants removed. Needless to say, this has not happened. Political and public attitudes have become more restrictive and we have had a backlash from countries such as the Netherlands previously known for their liberal outlook.

It is time to look for second best approaches. The parrot cry is that economic migrants and asylum seekers should be strictly separated. No such hard and fast distinction is possible. My own parents came to the UK between the two world wars. They came, as the saying goes, in search of a better life. But they also felt that the outlook for Jews in their part of the world in central and eastern Europe was distinctly gloomy.

They obtained permission to stay after an interview with a Home Office official who happened to have a personal interest in the disease my father researched for his Berlin doctorate. But would my father have made the effort to uproot himself and retake all his qualifications in a strange country and in a new language if he had not felt some danger of persecution in the air? On today’s criteria he would have been rejected as an asylum seeker because Hitler was not yet in power.

There is now an Immigration and Nationality Directorate at the Home Office to assess asylum applications. But its rulings have proved controversial. Recent cases include attempts to send applicants back to countries such as Iraq, Egypt and Zimbabwe. Yet anti-immigration lobbyists complain that few people are ever sent back and the new Queen’s Speech foreshadows proposals to make deportation easier.

Official statistics, which are widely believed to be underestimates, suggest a net annual immigrant inflow into the UK of about 250,000, of whom about 25,000 or less may be asylum seekers. Yet hostile comment concentrates on the asylum element. Both the government and the Conservative opposition try to make lists of types of immigrants that will benefit the British economy. These are mostly spurious exercises in “economics without price”. There would be no difficulty, for instance, in attracting enough nurses, technicians and kitchen attendants if they were paid the market wage for their work.

The economic effects of an increase in immigration are, at a first approximation, neutral. More workers serve a larger population. Gross domestic product per head hardly changes. Taking 2004 and 2005 together, the British economy grew by 5.3 per cent. According to the October National Institute Economic Review, of this, 0.9 percentage points can be attributed to immigration. But this only shows how absurd it is to regard total GDP as an index of welfare. GDP per capita is a less bad measure.

There are, of course, distributional effects. The inflow of foreigners from the new Europe Union accession states makes life cheaper for middle-
class taxpayers, but depresses the wages of some workers already here.

Contrary to popular belief, adults arriving in the UK have less spent on them by the government than would have been the case if they had spent their whole lives here. On the other hand, immigration affects in the short-term the relative return on capital and labour. Owners of capital, which is now in shorter supply, tend to gain and native workers in direct competition with immigrants to lose.

A longer-term historical perspective is attempted by two economists in a recent Centre for Economic Policy Research paper*. They found that 19th century capital flows tended to follow the great cross-Atlantic migrations and this mitigated downward pressure on real wages and employment in the recipient countries.

There are, to my mind, only two main economic drawbacks to immigration. The first is that more has to be spent on public infrastructure to maintain a larger population. This will be offset in some European countries where there is a fear that the active population will fall in the next few decades. But this does not apply to the UK where the population is still rising.

The other argument relates to the pressure on land in areas such as the south-east of England, which most of us do not want to see concreted over. It would be better if an experiment in relatively free immigration were to be conducted by the Republic of Ireland, where there is far more space available outside Dublin. But it surely should be possible to entice both immigrants and the indigenous population to move to less congested parts of the UK without forcing them into designated ghettoes.

There is a social limit to the speed at which immigrants can be absorbed. But the concentration of political hostility on asylum seekers and refugees – who will inevitably be a mixture of the genuine and spurious – is little short of scandalous.

*What Determines Immigration’s Impact? T.J. Hatton and
J.G. Williamson

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