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Friday, August 11, 2006

Comments

Jim

Good post, NE (although your para on A8 migrants making up 1-2% of the workforce maybe wasn't so good that it needed to be said twice!).

One thing I'm interested in at the moment is the impact of migration not on the labour market but on the housing market. There's evidence from the US that suggests that immigration raises average rents fairly strongly (http://econpapers.repec.org/paper/izaizadps/dp2189.htm). Housing supply being fairly inelastic, an increase in housing costs will tend to reduce the disposable income of others. Of course, you could argue that many if not most of the poor will be insulated from this because they either live in social housing and/or have their rents subsidised by Housing Benefit, but it's still worth considering.

New Economist

Oops - that was a typo! Thanks for picking it up.

Blissex
«There's evidence from the US that suggests that immigration raises average rents fairly strongly»

Well, this is not entirely new news :-), Greg Mankiw published a famously embarassing (but entirely reasonable) paper in 1989 predicting a housing crash by 2005. This paper has been revisited recently, and immigration made the difference.

Unlimited immigration to the UK (or the USA) is a way for governments to buttress the position of older, asset rich, voters in three ways:

* to tax a lot of young people who cannot vote or gain benefits;
* to keep low the wages of the those serving the needs of those voters;
* to put upwards pressure on the prices of assets owned by wealthy retirees.

Some governments seem to have decided that the best way to save the baby boomers is another baby boom, an imported one.

«many if not most of the poor will be insulated from this because they either live in social housing and/or have their rents subsidised»

This sounds like huge handwaving to me; because this may apply to the non-working poor. Incredible as it may seem to the upper classes for which all poor are benefit scroungers, a lot of the poor work, and for them competing with a much increased labor supply from abroad is not an entirely favorable experience...

Blissex

«blockquote>«While there is some anecdotal evidence of migrant workers effecting some local labour markets, A8 migrants are such a small part of the labour force (1-2%) that it is hard to imagine how they could "depress the wages of all"!»

That immigration has a depressing effect on a lot of wages is one of the advantages claimed by government ministers several times as to why the government first turned a blind eye to illegal immigration and now are enthusiastic about A8 immigration. The government pays for the NHS and other un/semiskilled-labor intensive organizations, and they have deliberately traded greater price competition at the bottom for lower taxes and better services for the middle class, and they have said so quite a few times.

Also there is quite a lot of extra-European immigration where the main purpose is to reduce the salaries of skilled Europeans, for example:

http://WWW.AmicusTheUnion.org/Default.aspx?page=4328
http://WWW.FT.com/cms/s/b79a936c-223b-11db-bc00-0000779e2340.html
«According to Amicus, 30,000 work permits were granted for IT occupations last year, of which about 18,000 were from India. This compares with a total of just 1,800 work permits issued for all IT staff in 1995.»
«The influx of foreign IT staff, however, highlights a growing shortage of qualified domestic recruits, she says. One reason could be that the collapse of the dotcom boom has deterred young people from considering the profession.
According to the Universities and Colleges Admissions Service, the number of students applying for computer science courses has halved from 27,181 in 2001 to 13,650 last year.
»

Note that the number for applicants are bullshit, because 2001 was chosen astutely because it was one of the two peak years, with applications enormously increased on their (already high) 1996 level, and way higher than 13,650 even now.

Anybody can check the figures from the UCAS data here:

http://WWW.UCAS.ac.UK/figures/ads.html
ftp://FTP.UCAS.ac.UK/pub/web/subj96.exe
ftp://FTP.UCAS.ac.UK/pub/web/subj00.exe
ftp://FTP.UCAS.ac.UK/pub/web/subj01.exe
ftp://FTP.UCAS.ac.UK/pub/web/subj05.exe

And the real numbers of applicants are: 1996: 15,439, 2000: 26,341, 2001: 21,043, 2005: 16,522; also the 2000-2001 starters are hitting the job market now, and despite the UK having had a huge wave of IT offshoring, the government is still handing out work permits for IT immigrants from outside the UK, obviously to keep prices down for the City. Note the very different treatment of potential competition for medical doctors, where the government has slammed hard on immigration from outside the EU to protect doctor salaries:

http://news.BBC.co.UK/1/low/health/4928954.stm
«Health minister Lord Warner told the BBC's Today programme the change was necessary as competition for jobs grew. "What we have done is make sure that we are becoming more self-sufficient in training our own doctors," he said. "There has been a 70% increase in the number of medical school intakes over the last seven or eight years and we have to find and ensure that there are post graduate specialist training posts."»

Note that I thoroughly support open immigration within the European Union, for political rather than economic reasons, as it is an essential aspects of ''ever closer union'' among peoples who should not fight each other again, and cooperate closely.

However unlike many disingenuous people I try not to gloss over the consequences, which are, for the countries receiving immigrants, to boost the fortunes of wealthy asset owners and to damage the position of wage earners.

On the costs and benefits (to the UK):

http://WWW.Telegraph.co.UK/opinion/main.jhtml?xml=/opinion/2006/07/02/do0202.xml&sSheet=/opinion/2006/07/02/ixopinion.html
«It is bizarre that the Labour Party, which still continues to insist that it is the party of the poor and vulnerable, should endorse a policy the purpose of which is the creation of what Marx called "a reserve army of labour": a pool of workers whose presence ensures that rates of pay for cleaners and ancillary staff in the NHS can be kept as low as possible.»

http://www.number-10.gov.uk/output/Page5708.asp
«So, fact four: far from always or even mainly being a burden on our health or education systems - migrant workers are often the very people delivering those services.
Take the nursing staff from the West Indies recruited by then health minister, Enoch Powell in the 1960s. By 1968, there were almost 19,000 trainee nurses and midwives born overseas - 35% of whom were from the West Indies and 15% from Ireland. Now, a quarter of all health professionals are overseas born.
Or consider the 11,000 overseas teachers now working in schools in England. Or the 23% of staff in our HE institutions are non-UK nationals - that's 33,530 out of 143,150.
Our public services would be close to collapse without their contribution.
»

http://WWW.Economist.com/displaystory.cfm?story_id=486825
«MIGRANTS, according to research published by the Home Office this week, can help boost growth, reduce inflationary pressure and fill labour-market shortages. [ ... ] The speed with which the government has executed a U-turn in its approach to immigration owes much to its need to bring in foreign workers to meet its recruitment targets for the NHS and education. The government now wants to encourage ?managed migration?. The Home Office research, putting a positive spin on migration, is part of this strategy. [ ... ] Last year?s British Social Attitudes survey showed that a majority of working-class people, including those who support Labour, think that immigrants take jobs away from people born in Britain. Too positive an espousal of immigration and Labour risks alienating its core voters, who may then retaliate by not turning out. Expect ministers to carry on blowing hot and cold about immigration.»

http://WWW.Economist.com/displaystory.cfm?story_id=486825
«MIGRANTS, according to research published by the Home Office this week, can help boost growth, reduce inflationary pressure and fill labour-market shortages. [ ... ] The speed with which the government has executed a U-turn in its approach to immigration owes much to its need to bring in foreign workers to meet its recruitment targets for the NHS and education. The government now wants to encourage ?managed migration?. The Home Office research, putting a positive spin on migration, is part of this strategy. [ ... ] Last year?s British Social Attitudes survey showed that a majority of working-class people, including those who support Labour, think that immigrants take jobs away from people born in Britain. Too positive an espousal of immigration and Labour risks alienating its core voters, who may then retaliate by not turning out. Expect ministers to carry on blowing hot and cold about immigration.»

http://WWW.DailyMail.co.UK/pages/live/articles/news/news.html?in_article_id=3
«There can hardly be a street in the country where a kitchen or roof hasn't been fixed by an eastern European.
But while the middle classes have been full of praise, [ ... ]
»

http://WWW.Guardian.co.UK/immigration/story/0,,1589275,00.html
«Try this thought experiment: 43.5% of nurses recruited by the NHS since 1999 come from outside the UK.»

http://WWW.Prospect-Magazine.co.UK/article_details.php?id=5309»
«Unsurprisingly, business organisations like the CBI insist that we need immigration. Employers like a large pool of willing workers with low expectations. The NHS, for example, is critically short of nurses, despite the fact that there are more trained nurses in Britain not working as nurses than there are working as nurses. But rather than improving its pay and conditions to entice British nurses back to hospitals, the NHS finds it cheaper to import thousands of nurses from the developing world.
The British textile industry tried to compete with low-wage economies in the 1950s and 1960s by importing large numbers of unskilled workers from Asia to work for wages that no British worker would accept.
»
«However, where your argument really goes pear-shaped is on ageing. The standard of living of the growing number of the aged depends upon a growing economy, able to provide an increasing volume of labour intensive services needed (many of them requiring unskilled workers). But the native labour force is projected to contract sharply-which implies a growing price for those services, hitting the aged poor worst.»

On the massive polish immigrations, which alone accounts probably for more than the government's official figures of 400,000:

http://WWW.Guardian.co.UK/g2/story/0,,1825469,00.html
«Other estimates suggest the real figure is between 350,000 and 500,000, while last week the respected Polish news magazine Polityka estimated that one million Poles have moved to the UK. Some 83% of them are under 34.»
«This benign invasion of eager and biddable young Poles has, it is generally agreed, been marvellous for the British economy and anyone who had previously struggled to find a cheap plumber.»
« Among them is Michal Wardas, a 24-year-old university student. He is off to spend the next two months working as a waiter on the Isle of Wight. "I like Britain. The people are friendly. I've been four times in the past two years,"»
«a quick back-of-an-envelope calculation reveals that around 1,000 Wroclavians a day are heading to London, Liverpool, Manchester, Stoke-on-Trent and other UK destinations. Nobody knows how many Poles go back home. But given that the Ryanair fare from Wroclaw to London often costs three times as much as flying in the other direction, it is clear that most of the traffic is heading one way.»
«"Why on earth would I go back?" says 34-year-old Rafal Stanczak from Wroclaw, who has been driving vans in Britain for a year. "Here I get four times the wages I got in Wroclaw, and it is only twice as expensive to live."
But it's not just about the money. Ask almost any young Pole in Britain why they are here, and chances are they will say they fancied an adventure. Unlike previous generations, whose only chance to experience the west was on TV, this lot - just like their contemporaries the world over - are keen to travel.
»
«According to figures from the Home Office, at least two-thirds of Polish immigrants in Britain take society's lowest paid work. "In England I can earn five times as much as in Poland," says Lukasz Nowak, a 24-year-old student boarding the bus to Anglia. "I've never been in Britain before. But I'm going to stay with a friend. He's promised to find me a job. Apparently it's easy." Can he speak English? "Nie."»
«every Pole we spoke to in London thought that EU membership was a good excuse to desert their country, albeit temporarily: the vast majority say their sojourn in the UK is not permanent.»
«The country's chronic unemployment rate is also shrinking: there are now 300,000 fewer jobseekers than last year, although this doesn't necessarily point to massive job creation, given the number of people who have left the country.
At the same time wages have gone up by 8%.
»

Lord

«This benign invasion of eager and biddable young Poles has, it is generally agreed, been marvellous for the British economy and anyone who had previously struggled to find a cheap plumber.»

Marvellous for those rich enough to hire one, but presumably not for the plumbers!

Blissex
«What is happening today in Poland is not so different to the experiences of countries like Portugal, Spain, Greece and Ireland in the past - it's just happening faster.»

Ah not just «faster»: because Poland (plus the rest of the A8) is much bigger and much less developed than any of those you mention. There is little doubt that the poles are the new irish in the UK, but the main difference is that there are ten times more of them.

«There are large transitional costs, to be sure. But the key lesson of the single market is that (despite its many flaws) opening up the borders has created a more prosperous and secure Europe that ultimately benefits all.»

For most, more than «all», and «large transitional costs» is a pretty amazing euphemism for ''a deliberate policy of redistribution from the poor and young to the old and wealthy''. Because the distributional impact of immigration can be a bigger thing than its GDP impact.

Never mind that a large distributional impact from the young and poor to the old and wealthy can be a big vote winner, as population ageing and the baby bust increase the electoral weight of the old and wealthy and many of the young and poor cannot vote because they don't have citizenship yet.

BTW, this applies to the countries to which immigrants go; for the source countries, emigration redistributes from the old on fixed incomes to the young on wages. In particular the impact on old pensioners can be brutal.

Blissex
«And the real numbers of applicants are: 1996: 15,439, 2000: 26,341, 2001: 21,043, 2005: 16,522;»

Oops, I confused numbers a bit. That was for accepted, and only in some computer science subspecialties. I have compiled a better and more complete table for overall ''computer science'' numbers as reported by the UCAS:

YEAR    APPLIED APPL.%  ACCEPT  ACC.%   CLEARING CLEAR. %

1996 15,717 100 11,826 100 2,888 100
1997 17,982 114 13,734 116 3,499 121
1998 20,442 130 15,472 131 4,227 146
1999 24,054 153 18,101 153 4,781 166
2000 26,847 171 20,071 170 5,173 179
2001 30,737 196 22,092 187 5,299 183
2002 26,137 166 21,136 179 4,607 160
2003 22,654 144 19,374 164 4,260 148
2004 17,964 114 16,763 142 3,645 126
2005 17,396 111 16,633 141 3,459 120

Keeping in mind that IT work permits have gone from 1,800 in 1995 to 30,000 in 2005 (according to Amicus), and that it usually takes 4 years for students to graduate in computer science (there is usually a year of internship).

Notes on the numbers:

* This includes EU & overseas students. Small numbers.
* It is not clear to me if the 'CLEARING' numbers are a subset or in addition to the 'ACCEPT' numbers. I think that they are in addition.
* Includes sub-subjects "computer science", "computer systems engineering", "software engineering", "artificial intelligence".
* Excludes mixed degrees or those physics or mathematics degrees that often result in IT jobs anyhow.

It would be interesting to see equivalent numbers for other subjects, especially for work permits, but my understanding is that there is relatively little non-EU immigration for other types of work that usually require a degree.

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