1. What the immigrants can do for us, or the economic consequences of Mr Blunkett. David Coleman Robert Rowthorn Presentation given at the Centre for Research in the Arts, Humanities and Social Sciences, Cambridge, 5 July 2004.

2. New Labour, new immigration policy Previous policy put ‘restriction of settlement’ first, subject to ‘needs of labour market’ and open- ended ‘obligations’. ‘Race relations’ prominent. Result - more immigration since 1980s. New policy takes positive view of immigration, still subject to controls (especially asylum, focus of much legislation). Social benefits of ‘diversity’. Result - even more immigration since 1997, with ‘no obvious upper limit’.

3. Current UK migration situation Some (two-way) migration normal in advanced societies. Work - related migration for highly skilled long standing, was not very controversial. Most immigration non-labour; asylum 25? percent net inflow. Net inflow 2003 151,000; foreign +236k, UK -85k. Easier entry for non-labour migration, expansion of low-skill work permits, working holidaymakers Two revisions of migration estimates since 2001 census

5. Net migration to UK by citizenship

6. The case for more immigration - positive and negative, theoretical and empirical Demographic benefits - future workforce, ageing. Essential for economic growth. Entrepreneurial benefits. Fiscal benefits. Fill skills shortages, keeps NHS going, IT needs. Perform ‘dirty jobs’. ‘London / UK would collapse without them’. Cultural, social benefits of ‘diversity’. All with no damage to ‘native’ interests.

7. Three related demographic problems behind argument for more immigrants. End of population growth, possible decline End of growth and possible decline in labour force and of young labour force entrants; failure of economic growth. Population ageing leads to crises in pensions and old-age care.

8. Immigration can solve all that: Immigration cannot be stopped anyway. Will sustain or expand population size. Provide rejuvenated and expanding workforce. Rectify ageing population while saving natives from trouble of reproduction. Everyone gets what they want and lives happily ever after.

9. Immigration as demographic salvation? Do we need to be saved? Why should ‘no decline’ targets be met (UN 2000)? Is zero growth or decline axiomatically undesirable? Immigration can keep population, or workforce size, approximately constant. But that can require very large inflows; and adjustment difficult. Immigration can only 'solve' population ageing with large and infinitely increasing population increases. Given sub-replacement fertility, migration to maintain constant size must eventually replace original population with immigrant population. Does a society ‘save’ itself that way? ‘Economism’ and ‘Demographism’ tend to ignore environmental and social problems of immigration and population growth.

10. UK population - no decline imminent

11. Projected population growth by component, United Kingdom, 2002-2031, thousands. Source: GAD 2004.

12. Entry to working age population

13. Projection of UK population aged 15-64

15. Population ageing: an unavoidable destiny Population ageing here to stay – an irrevocable feature of mature society. Birth and death rates for a younger population gone for good. With constant vital rates, population age- structure will eventually stabilize. Longer life means even older populations, but changes meaning of ‘old age’.

16. Potential Support Ratio, UK 1980-2100 GAD PP 1998-based. Population Trends 103

17. No limits to migration? Immigration and the PSR Population Trends 103

20. The economic arguments for mass migration –labour market and macroeconomic Increases GDP Fiscal benefit Essential for labour needs Does the natives no harm

21. That ‘0.5% GDP growth’ Rounded up from increase of 0.4% (not 0.5%) in population of working age. Assumes that output rises pro rata But what matters is GDP per head Ignores contribution of immigration to population growth : 0.25% Increase per head therefore 0.15% or £25 per year = 48p/week Ignores lower workforce participation and displacement effect.

22. Population growth does not make you rich (western countries 2000)

25. Fiscal effects - many studies, unclear message Variety of approaches - static and dynamic, national and provincial. Variety of effects - educated, skilled immigrants, mostly from rich countries, can make large contribution. Unskilled immigrants, mostly from poor countries, may not. Mixed, small overall effect (e.g. Sweden -$718) e.g: Net present value in US - high skill+$96k, low skill -$36k (Storesletten 2000). Annual fiscal effect Denmark: rich countries +$1650 poor countries -$8546 (Wadensjo ‘99). Emigration usually (but wrongly) ignored. Fiscal analysis relates to limited, direct effects only.

26. Net fiscal contribution of immigrants

27. Alternative Estimates of the Fiscal Impact of Migrants in the UK in 1999/2000. Source: Rowthorn

28. Problems of ‘labour migration’ Most migration is not (formal) labour migration. Foreign / minority unemployment rates high in first and second generation; workforce participation rates low. Increasing evidence that as a whole immigration damages interests of native workers ( Dustmann, Hatton and Tani )

29. Gross inflows by selected purpose of migration, 2001. Source: OECD 2003 fig 1.3

30. Workforce Participation Rate 2000-1. Source: OECD 2003 table 1.14

31. Unemployment Rate 2000-1. Source OECD 2003 table 1.14

32. Net migration for purposes of work, UK 1992 - 2001 thousands

33. Strategic problems of labour migration ‘Need’ for immigrant labour may reflect and perpetuate poor conditions and lack of training. Part of ‘need’ arises directly from growth of immigrant population itself; espec. London and SE.. Immigrant labour distorts economy; creates ‘dependence’, maintains unsatisfactory enterprises with poor conditions (e.g.NHS). Permanent population acquired for transient jobs (Bradford, Oldham, etc.) Excessive priority to demands of employers.

34. Effects on employment and wages Economic theory represents depressing effects of immigration on wages as a counter-inflationary benefit. Some studies argue that this does not happen. But: UK evidence: higher unemployment ( 2% - 6% per 10% immigrant increase), + higher wages (Dustmann et al). US evidence: 1980 - 2000 more jobless among low-skilled (high school dropouts), reduced wages 7% (Borjas 2004) EU: 83 native jobs lost per 100 additional immigrants (Angrist and Kugler 2003) Immigration to South depresses in-migration from areas of high unemployment in N (Hatton and Tani 2003).

35. Further considerations Most studies including UK (e.g. Gott et al. p. 29) ignore other likely cost differences: Health Education. Housing and land. Crime Race relations Asylum Remittances Additional infrastructure (water, roads), congestion Non-economic effects on rural and urban environment Ethnic and social change

36. Effects of different migration assumptions on household formation, 1996 - 2021. Assumes each extra 40k immigration yields 450k households by 2021.

39. Conclusions Immigrants cannot, on balance, do much for us; but UK can do much for immigrants. UK future population futures relatively benign. ‘Replacement’ migration for total and working-age population difficult, for age-structure a fantasy. Economic consequences of Mr Blunkett as conventionally measured are marginal, probably negative in UK; any benefits accrue to elite and to immigrants. Broader economic costs probably more severe. Social, political, environmental costs much more important than economic considerations? What problems do we have, to which large-scale migration and its discontents could possibly be the answer? Why does government persist in so risky and unprofitable a programme?