IES viewpoint: Lies, damned lies and migration statistics

Newsletter articles

1 Feb 2012

Employment Studies Issue 15

Nigel Meager, Director

As regular readers of this publication will know, as a major supplier of evidence to public policymakers, IES is a firm advocate of evidence-based policymaking. For this reason I feel no need to apologise for revisiting the question of labour migration. It is precisely because it is such a politicallycharged topic that we need to return frequently to test policies and the claims underlying them against the evidence.

Two recent highly-publicised debates in the UK have highlighted the cavalier use of evidence in discussions of migration. In the first, the government's 'Migration Advisory Committee' (MAC), a group of eminent economists set up to advise the government, published a study[1] suggesting that certain types of immigration may, in certain circumstances, have a depressing effect on domestic employment. Despite the clear caveats in the report[2] itself, this did not prevent government ministers such as Damian Green[3] and anti-migration lobby groups[4] claiming strongly that this kind of evidence supported the highly restrictive current approach to labour immigration from outside the EU into the UK.

At the same time, the independent National Institute for Economic and Social Research published a study[5], using different data (but broadly similar methods) with conclusions apparently diametrically opposed to (media interpretations of) the MAC study, and showing no relationship between immigration and registered unemployment.

The public and media could be forgiven for being confused by this controversy. As several expert commentators[6] have noted, however, the differences between the two sets of findings can be adequately explained by methodological and data differences. In particular, the comments by ministers and others not withstanding, the latest MAC study with its cautious and limited findings, certainly does not contradict the vast bulk of research evidence (of which more below). Rather as Preston[7] points out: "Viewing the totality of new evidence, it is difficult to see a persuasively robust empirical case for long run harmful effects of immigration on employment of the UK-born".

This public debate was immediately followed by an article in a national newspaper by two government ministers[8], criticising the previous Labour government's 'lax' approach to immigration. They suggested, on the basis of in-house research from the Department for Work and Pensions[9], that foreign-born UK residents are more likely to claim social security benefits, and implying that this might often be without entitlement to claim.

Unsurprisingly the popular press jumped on these 'findings' with alacrity, but as expert commentators[10] immediately pointed out, what the evidence actually shows is that immigrants make a positive and substantial net contribution to the public finances, are much less likely to claim benefits than their native counterparts, and pay far more in tax than they claim in benefits. It is interesting to note that the relevant minister's knuckles were firmly rapped by the chair of the independent UK Statistics Authority[11] (UKSA) for allowing it to be thought that the data on which the assertions about benefit claims were based were in any sense approved 'national statistics' (they are not).

What can we conclude from all this? In practice it seems that this is an area in which the reverse of evidence-based policymaking is taking place, with selective evidence being trotted out to support existing policy positions. To some extent, the UK government is caught between a rock and a hard place on this topic. Having committed itself to a target of net migration may well turn out to be one of its biggest policy mistakes (arising, like many such mistakes, from knee-jerk populism rather than economic logic). Net migration flows are largely outside the government's control, being driven by internal EU movements, as well as, increasingly, by British workers returning or leaving the UK in smaller numbers. It is likely, therefore, that to meet its target for net migration, the government will need to be increasingly restrictive about the numbers of non-EU migrants. This will affect a wide range of potential immigrants, many with high-level skills, from research scientists in universities to specialists in key industries such as engineering and financial services. Many industry organisations and senior business people, including the Confederation of British Industry, have expressed serious concerns about the potential economic impact of this approach. Given this background, it is perhaps no surprise that politicians and other interest groups are sometimes so selective in the way they use evidence.

Looking at the issue more widely, however, it is indeed ironic that governments, in many countries and of many political persuasions, that are otherwise keen exponents of the benefits of free markets in most areas of economic life, appear so resistant to the overwhelming evidence of the economic benefits - or at worst, lack of economic harm - associated with the free movement of labour. Of course there are no simple answers to the question "is immigration a good or a bad thing?" It depends partly on the type of immigration and partly on whether its effects are measured through economic impact (e.g. on a country's GDP), through labour market impact (e.g. on the wages or unemployment levels of 'native' workers), or through broader impact on factors such as social cohesion. Our main interest is in labour market impact, although it's worth noting in passing that most studies show positive economic impacts as well - immigration generally leads to higher levels of GDP, although effects on GDP per capita tend to be smaller or neutral.

As far as labour market effects are concerned, popular perception, fuelled by media hype and reinforced by campaign groups such as Migration Watch, overwhelmingly still relies on the 'lump of labour fallacy' of undergraduate economics texts. This assumes there is a fixed quantity of labour demand (or 'jobs') and that enhanced labour supply, through immigration, will inevitably drive down wages and/or generate increased unemployment. It cannot be stressed too often that the bulk of robust empirical evidence, for most countries, does not support such arguments. A good recent example is an authoritative econometric study[12], covering the 1990s, using a comprehensive migrant database across all OECD countries, which concludes in simple terms that immigration is good for domestic wages and unemployment, or at worst not bad for them, while emigration has the opposite effects:

"In all cases we find that immigration had a positive effect on the wages of less educated natives. It also increased or left the average native wages unchanged and had a positive or no effect on native employment. To the contrary, emigration had a negative effect on the wages of less educated native workers, and it contributed to increase within-country inequality in all OECD countries. These results still hold true when we correct for the estimates of undocumented migrants, for the skill-downgrading of immigrants, when we focus on immigration from non-OECD countries, and when we consider preliminary measures of more recent immigration flows for the period 2000-2007)"

It is disappointing, if not surprising, that politicians and policymakers so often seem impervious to this kind of evidence. There are few certainties in economic and social sciences, but the consensus among serious analysts is sufficiently strong on this matter to be persuasive to the point of conclusive. It seems, however, that as with some topics in the natural sciences (climate change and evolution come to mind), a consensus of hard evidence is insufficient to overhwelm a 'denial' tendency, particularly when the latter has political traction in some societies.

Footnotes[BACK]

1. Analysis of the Impacts of Migration, Migration Advisory Committee (2012): http:// www.ukba.homeoffice.gov.uk/sitecontent/ documents/aboutus/workingwithus/mac/27- analysis-migration/01-analysis-report/analysisof- the-impacts?view=Binary" rel="external
2. The report stressed that its results were 'associations' rather than showing causality, and emphasised that some results were not statistically significant, while others were not robust to a number of statistical tests.
3. Whitehead T (2012), 'Immigration does keep Britons out of jobs, government committee admits', The Telegraph, 10 January: http:// www.telegraph.co.uk/news/uknews/ immigration/9004733/Immigation-does-keep- Britons-out-of-jobs-government-committeeadmits. html
4. In particular, and at about the same time, the campaign group Migration Watch published a document claiming to show a 'correlation' between immigration and youth unemployment: Youth Unemployment and Immigration from the A8 Countries, Migration Watch UK (2012): http://www. migrationwatchuk.org/briefingPaper/ document/247
5. Lucchino P, Rosazza-Bondibene C and Portes J, 'Examining the relationship between immigration and unemployment using national insurance number registration data', National Institute of Economic and Social Research, January 2012: http://www.niesr. ac.uk/pdf/090112_163827.pdf
6. See, for example, Jonathan Portes (2012): http://notthetreasuryview.blogspot. com/2012/01/british-jobs-and-foreignworkers- todays.html, January; Matt Cavanagh, Institute for Public Policy Research (2012): http://www.ippr.org/articles/56/8491/ does-immigration-cause-unemployment, January; and Ian Preston, Centre for Research and Analysis of Migration (2012): http://www. cream-migration.org/comments.php, January
7. op. cit.
8. Grayling C and Green D (2012), 'Labour didn't care who landed in Britain', The Telegraph, 19 January: http://www.telegraph.co.uk/ news/uknews/immigration/9025260/Labourdidnt- care-who-landed-in-Britain.html
9. 'Government publishes overseas benefit claimant research', press release, Department for Work and Pensions, 20 January 2012: http://www.dwp.gov.uk/newsroom/pressreleases/ 2012/jan-2012/dwp005-12.shtml
10. See, for example, Dustmann C, Frattini T (2012), 'Migrant Benefit Study', blog post, Centre for Research and Analysis of Migration: http://www.cream-migration.org/ comments.php, 22 January
11. The correspondence between the minister and the UKSA can be seen here: UKSA (2012): http://www.statisticsauthority.gov.uk/reportscorrespondence/ correspondence/index.html, January
12. Docuier F et al. (2011), 'The Labor Market Effects of Immigration and Emigration in OECD Countries', Discussion Paper no. 6258, Bonn: Institute for the Study of Labor: http:// ftp.iza.org/dp6258.pdf