A (5:28)
Well, thank you very much, Ronnie, for that kind introduction. So today's lecture, as Ronnie said, is really going to be about the impacts of migration on destination countries. And where we got to at the end of last week's lectures was basically to say, we aren't going to have immigration, but countries like the UK are also going to have controls on immigration. And those controls basically mean saying yes to some people who would like to come to the uk, would like to migrate, and no to others. But how many people should we say yes to and what types of people should we prioritise? Who should we say yes to? Who should we say no to? To answer those questions, we really need information on what the impacts of migration are on people's lives. And that is the subject of today's lecture. And this is going to be inherently, I think, very, very complicated. The impacts on what? I'm going to give you quite a long list in a slide or two. The impacts on who? The effects may well be different for different sorts of people. We know from last week that migration is generally good for the migrants, but today we're going to be thinking more about the impacts on the locals now. So what the locals care about? Well, I think most people care about people outside that country. We have assistance when there are natural disasters, we have overseas aid and so on. But I think it's also fair to say that probably people care more about for those inside the country than they do outside. They're not completely indifferent to those outside, but they care more for people closer than home. And so the impacts on the locals are important and the locals obviously are the ones who have the votes. So if you want policies that are going to be politically viable, you've got to pay attention to them. It's also the case that the effects of different types of migrants are very likely to be different as well. And this is all made much more complicated if you're coming to this, reading the newspapers or even reading the academic literature by the sort of cherry picking, the exaggeration, the misrepresentation and just simply fabrication that, you know, we find when we look at what last week I called was the binary polarized debate that we have that I think is fundamentally very unhelpful thinking about whether immigration is simply good or bad. Okay, so this lecture will give you a very quick run through of evidence on the impacts on demography, the size of the population, its mix, the economy, things like gdp, productivity, entrepreneurship, innovation, the labour market, wages and unemployment, prices, profits, public finances, the public services, our communities, about how it affects identity and values, on crime. And that's quite a long list. And it's all going to be pretty brief, so probably too brief for many of you to feel that I fully explained anything. So feel free to ask questions at the end, but feel even freer to buy the book and to read them. Each of these has its own sort of chapter, but ultimately, just try not to forget that we're really interested in how migration affects people's lives. You sometimes hear statements like the economy needs migrants, it's really unhelpful. It's about how migration ultimately affects people's lives that we need to think about. Okay, so let's stop. So demography. So suppose we think about having a higher or a lower rate of immigration. What does that mean? At its most basic, it simply means if we have higher immigration, it. It means a higher rate of population growth. It means a bigger population in the future, it means a higher share of migrants in the population in the future. And it also is likely to have important effects on aging. But as I'll show you in a minute, the effects on aging are probably much less than actually is commonly assumed. So you will often hear we desperately need high levels of migration because of our aging populations. But actually the impact is not as big as I think many people think. But it's important to realize that countries don't get full. Sometimes I get asked, well, isn't the UK full? And I'd always say no, I don't think there's any upper limit on population of the uk. Surrey, which is this rather prosperous area just south of London, gives over more land to golf courses than it does to houses. And my colleague Paul Cheshire showed that. So the UK is not full, but there are limits on how fast population should grow. If we don't have any immigration at all, we're going into a period when we would have actual population decline, and I don't think that would be a good idea. But I think we also kind of want to avoid very rapid population growth. So a couple of years ago, we had UK population growth that was, you know, more than 1% in a year, quite possibly the highest rate of population growth for over 200 years. I tend to think of population growth. Aiming for population growth of a quarter to a half percent per annum is sort of reasonable, but it's sort of not a rigid rule. Now, I just want to kind of illustrate through some numbers what are the different consequences of different levels of net migration. But before I do that, I want to just show you an example of how easy it is to misrepresent sort of statistics and what is happening. So the first quote here is, you know, taken from The Daily Mail. UK welcomed 1.27 million foreign nationals in just a year. That statistic is more or less right. And that's enough to fill a city the size of Birmingham, which is the UK's second biggest city. And. And that sounds why, wow, we're adding the population, the equivalent of a size of Birmingham, a city the size of Birmingham in a single year. That Sounds incredibly dramatic, but here is the same statistic presented a different way. You live in a Street with 100 people. The little old lady at number 73 downsizes and moves out. In her place you get a young couple and a child. That is exactly the same rate of population growth, but one sounds very dramatic, the other sounds trivial, to be honest. So let's kind of look at a bit more numbers. So how you present statistics can have a big effect on how they're perceived. Okay, so on the horizontal axis here, we have annual net migration as the percentage of the population. I want you to imagine that we just had steady migration year after year. On the left hand side we have zero. That would be what has been in the news lately, which is net zero migration. I actually think it's been more in the news than actually is likely to happen, but that's a slightly different story. And kind of what you can see here is if you have net zero migration from now until 2050, so for the next 25 years, the Blue line tells you that actually our population would fall by sort of about 7% by 2050. So we'd have really quite a size, substantially smaller population by then. And the share of migrants in the population, which is the red line, would be about 12%, which is a bit lower than it is currently. At the other extreme, if we had much higher net migration, 1% a year, every year, and we had higher than that a few years ago, we'd end up with population growth of 30% in the next 25 years, ending up with a population of about 90 million. And the migrant share would be about 32%, sort of double what it is currently. So you can see here that the level of net migration I've talked really just about the two extremes have quite big consequences for the size of our population and the share of our population that is migrants. But let's look at what the impact is on the aging of the population and what is called, sometimes called the dependency ratio. So the fraction of the population which is not of working age. Now on these lines here, what you've got is the dotted lines is sort of where we are now. And they're very crudely two sorts of people who are dependent in our economy. They're the young children and there are the old. So the green line here shows you what is the fraction of the population that's going to be 70 or older in, in 2050 for different levels of net migration. And you can see if we had net zero migration, it would be about 20%. If we went to 1% a year, it would be about 12%. So lower, but not that much lower. And I'll come back to that much what exactly why? But when people are talking about migration and demography, they're often talking about aging, but they're ignoring what's happening on the children's side. So actually we'd have a higher fraction of children in the population with a higher level of net migration. That's not because the migrants have generally higher fertility rates. It's because the migrants when they come are sort of between 25 and 40. And those are the age when everybody has children. And so if you add up these two things, which is the blue line at the top, you can see these very big differences in the levels of net migration have really quite small impacts on the dependency ratios in our society. So migration just doesn't really have a big effect on dependency ratios. So why is that? And the reason for that is that the impact of migration on aging is much bigger in the short than the longer run. And the reason for that is that migrants tend to be young when they first arrive. If you come as a 30 year old migrant, you're making the country younger to the, but if you're still here another 40 years later when you're 70, you're making the country older. And so, you know, migrants just age at the same rate as everyone else. So migration, aging is a long run challenge that we face. And migration is not a very effective solution to it because it only really has short term impacts. But it's also kind of not, I think, very useful to think of dependency as just being linked to age. People can be dependent or contribute at any age. And that brings us on to talking about the economic outcomes again. If you look at the news, you see pretty dramatic headlines. You know, immigration powering the US economy, immigration falling, the economic costs may be high, and so on. And so again, you know, quite natural question is, is immigration good for economic growth? A lot of these headlines are just talking really about the total size of the economy or the total level of employment. And immigration is very likely to be good for those things. But that isn't the sort of growth that we should be aiming for. And the way to understand that is to think of just this very simple formula. That is total gdp, which is our best, though imperfect measure of the size of the economy is equal to total population times GDP per capita. Higher immigration means higher population. This drives, makes GDP higher. But we really shouldn't be aiming for total gdp. Our focus should be on GDP per capita, because that's closest to what the average material standard of living is for people. And we need to focus on how immigration affects people's lives. So we really should be interested in how does immigration affect GDP per capita. And I'm sorry about this, but another formula is sort of helpful for this. So GDP per capita, which is just GDP divided by population, we can write as GDP divided by employment times employment divided by working age population times working age population divided by total population. I hope that's okay with everybody. Now for exposition. I think I'm going to consider each of these three terms separately. But any particular migration policy is quite likely to affect all three terms. So it's a little bit, it's just for ease of explanation. Okay, so the first term on the right hand side, working age population divided by population, that's basically just related to the dependency ratio. Thank God I've already done that, so we don't have to talk about that. So I've talked about how immigration affects the share of the population that's working age, the middle term employment as a share of the working age population. This is just the employment rate, the fraction of the working age people who are in employment. So how does migration affect the employment rate? And a natural place to first start is to ask the question, well, are migrants more or less likely than locals to be in employment? And because there's a simple sort of composition or batting effect, average effect, that if you average add a migrant who on average is like the existing migrants, the first effect is going to be just, you know, is there employee probability of being in employment above or below the average? So let's look at some statistics on this. So these, this chart here is the gap in the employment rate between migrants and locals working age only if it's above the zero line, that means migrants are more likely to be in employment than locals. If it's below the line, they're less likely to be. If we look at the US and actually a lot of debates about migration come from the US and are informed by the US perspectives on these things, which as we'll see are not always terribly accurate. For other countries, you can see that the red line gives you the total employment rate, men and women combined in the US for migrants is above that. For locals, there's quite a sizable positive effect for men and a negative effect for women, but it averages out to a small positive effect. There are other countries that are a bit similar like that. In Britain, actually, the employment rate of migrants and locals, very, very similar. But you go to some of the European, the continental European countries. And it looks really very, very different. So for example, if you went to the Netherlands, you would find the employment rate of migrants is 15 percentage points less than that of locals. Sweden is almost similar like that. Most of these bars are below the line rather than above the line saying that in these countries migrants are less likely to be employment than the local. But it's a bit misleading to look just at overall employment rates because it's actually not whether you're a migrant or local that is the most important factor in influencing whether you're in employment. It's your other characteristics, it's your education, it's your age and other things like that. And just to show you how this can be important, this shows you the employment rate on the vertical axis and people's age on the horizontal axis. For the uk, the employment rate for the people who are UK born, what I call the locals and people who are foreign born, the migrants. The first thing to note is I think just how similar these are. Employment rates are low when people are young and in education. They're low when their people are old and they're retired and they're pretty high when they're sort of in middle age aged. There's a little bit of a tendency in the UK for every, for every age migrants to be slightly less likely to be in employment than, you know, the Brits, particularly in the prime and middle aged groups, young and the middle aged. But it's much smaller, the gaps there are much smaller than the gaps between young and middle aged Britons and between middle aged Britons and older Britons. And you would find the same thing if you looked by education. The gaps in employment rates between Britons who are well educated and not very well educated is much bigger than any employment gap between migrants and Brits. And so I think the conclusion you should draw for that is that the impact of migration on employment rates is almost certainly going to depend on who the migrants are. And in some countries migrants have higher employment rates than locals. As we've seen. In others, employment rates are lower and employment rates tend to be higher when migrants are higher skilled. And I think if you're thinking about we want migration to increase the employment rate, simple rule for that is select migrants who are more likely to be in work would be the policy that you would recommend. Okay. Finally, the final term in that formula was GDP divided by employment. And this is what sometimes would just be called labor productivity. Paul Krugman famously said productivity isn't everything. But in the Long run, it's almost everything. And you know, the UK has had a really terrible decade and a half with its productivity. You know, average living, productive, average productivity has barely changed. And as a result of that, I think that's a simple explanation for why people generally are quite grumpy at the moment. So, you know, the current government is right to say productivity should be our number one priority. So how does immigration affect productivity? Unfortunately, I think our evidence base here is really quite weak. But in general terms, we expect labour productivity to depend on the skills of the workers, the capital they have to work with, the technology embodied in that capital, and things like innovation and things like entrepreneurship as well. Again, you can find some big claims out here. I've just put a sort of selection up here. Why immigrants make great entrepreneurs. Immigrants in the US more likely to start firms and create jobs. 80% more likely to founder for migrants compared to US born citizens. Immigrant inventors are crucial for American national and economic security. Again, when you start digging down into these studies, you normally find that there's quite a bit of exaggeration going on in these claims. So let's look at a few of them. There's many more details in the book. I keep trying to sell the book. So, first of all, are migrants more likely to be. So this is migrants as a percent of inventors compared to migrants as a percent of the working age population. Inventors here is defined as named in a patent application, successful patent application. I should say that I'm doing it here. Migrants as a percentage of the working age population. Some studies will do it Migrants as a share of the total population. But we're probably not surprised to know that many, most inventors are not pensioners and they're not toddlers either. And also migrants are much less likely to be toddlers and older people. So if you do migrants as a percent of the total population, what you find is that blue bar comes down and the red bar looks more favorable compared to that. And some of those studies on the previous slide are doing exactly that. But I think it's better to compare with percent of the working age population. And again, you see there's quite a lot of variation across countries. The U.S. for example, very similar. There isn't really. They're not more likely to be named in patents than Americans. Switzerland, the migrants are much more likely to be inventors than the Swiss. Some other countries, it's kind of quite similar. So Britain is quite sort of similar. Migrants slightly more likely. But in quite a lot of these other countries that we're looking at, actually it's the other way round. So across the piece, there really isn't a great deal of evidence that migrants are more likely to be inventors than locals. Are migrants more likely to be entrepreneurs or self employed entrepreneurs? Sounds really, you know, that sounds really unique, you know, fantastic. The self employed include people like, you know, plumbers and things like that who are important but probably not quite as glamorous. So you need to understand that not all of these are people who are sort of founding some, you know, fancy Internet startup. Again in the US Here, quite a lot of variation across countries. In the us, migrants are more likely to be self employed than locals. That's also true a little bit in Britain, but not hugely. But again, there are other countries in which it's actually the other way around and a lot of countries and actually it's quite similar. So again, across the piece, there isn't a general tendency for migrants to be more entrepreneurial than locals. They look actually very similar. They're not worse, they're not better, they just look very similar. Now you might say, well, what about the quality of the businesses that these people found? And this is the data for the uk, although actually the US looks incredibly similar. So most of the self employed are solo self employed. They're people like plumbers. They don't have any employees, it's just them. So that here you see, so that means the number of these are the people with zero employees. You can see that sort of 84% of migrant self employed have no employees. A bit higher than the locals, 83%, but basically exactly the same. Again, if you look at the size of the businesses, the ones that do have employees, there's a slight tendency for the businesses that are owned by Brits to be bigger than the businesses owned by locals. But really it's almost exactly the same. So migrants and locals look very similar when you look at entrepreneurship, although there are papers and claims out there that they're very different. But I don't think that actually is the case. Whether higher immigration leads to higher or lower innovation entrepreneurship, again, it's always, I think, going to come back and this will be a theme. Depends on who the migrants are. If you want to raise innovation and entrepreneurship, you probably should select migrants on the basis of skills, on the basis of the sorts of people who go on to form businesses. And if you just want to think about having highly productive workers who are not entrepreneurs or innovators, just ordinary people, that's also probably true. I think to a first approximation, migrants, workers, productivity depends on their skills in exactly the same way as it does for locals. There really isn't anything fundamentally different about migrants and locals. They're just people. And if you compare people, migrants and locals with the same set of skills, they have more or less the same levels of productivity. Okay, Earlier I mentioned that I thought that there's a cost of having very high population growth, but I didn't really explain why, so I'm going to try and explain why. So if you add a new person to your population, you need to equip them with new capital, both private sector and public sector. They need to have a house, they need to have a machine to work with, they need roads to travel on, they need a hospital to be treated in. And if you don't equip them with new capital, you're basically likely to have either a combination of lower productivity in the private sector or sterity in the public sector. And that equipping them with new capital consumes resources that could have been used for something else. So in many countries, the capital output ratio is about 3 the value of total capital to the value of total output. And that implies that if you increase your population by 1%, you've got to spend 3% of your total resources equipping those new residents with all the capital, public and private, to keep to just sort of stand still, to provide them with the same capital as the existing population. Now, those new people bring some resources with them, so 1% of the population, but they probably only bring 1% extra resources. So higher population growth, as the higher the rate of population growth you have, whether that's through migration or anything else, requires you to divert a higher share of your income to just equipping new people with the existing capital instead of upgrading the capital of the existing population or using it for something. So that's why I think high rates of population growth. We want to avoid them. Okay, immigration and the labour market, next topic. So a couple of other headlines here. Migration does depress. You know, it's in capital letters that means it's true. Does depress wages for the low skilled as poor British workers lose hundreds of pounds a year and then another one. Migrants do not affect jobless levels, say researchers. So the idea that immigration harms workers is an old one. Karl Marx wrote in a letter once that the ordinary English worker hates the Irish worker as a competitor who lowers its standards of life. And I'll try and explain, you know, why this is a sort of common view. I think it's useful to think about immigration as Changing the size of our labor force, but also the mix in terms of skill and age and things. So to start I'm just going to consider changes to the size. So I'm afraid I'm going to give you a picture which is sort of beloved of economists. I'll try to explain it. So this is a sort of a picture of the labour market. So on the horizontal axis we have the total level of employment. On the vertical axis we have the level of wages and we have a labour supply curve. This tells us for every level of wages, how many people want to work at that level of wages. And, you know, reasonable to think wages are higher, more people want to work. So the labour supply curve is upward sloping. We also draw this, a labour demand curve which is basically says the higher wages, so the more expensive it is for employers to hire workers, the fewer workers they want to hire and so their employment will be lower. So we have a lower, we have a downward sloping labour demand curve and an upward sloping labor supply curve. A well functioning market. We would end up at the point where demand equals supply and that would initially be point A. And then the effect of immigration, just very, very simple. We're adding more workers, so we're adding more labour supply. And so the labour supply curve moves out for every level of wages, more people want to work than before. And so the labour supply curve after immigration is to the right and we end up at a point like B which has got lower wages and it's got higher employment, but the employment of the locals will be going down. So a lot of that higher employment is actually of the new migrants. So that's, you know, the simple economic supply and demand picture for why we might think that immigration reduces wages and reduces employment opportunities for locals. But how much depends on how effective the economy is in generating new jobs as labour supply increases. And the evidence is that actually economies are really good at creating new jobs as the labour force increase. So what this graph shows you on the horizontal axis we have the percentage change in the labor force from 1963 to 2022, so 60 years. And on the vertical axis we have the percentage change in employment. And the solid, the black line Here is the 45 degree line. So where these two things would be equal. So over on the right hand side of this graph you've got Canada, Australia, New Zealand with very rapid big increases in the labor force in this period. Not all of it is because of immigration. There are also women entering the labour market in this period. But for those countries, a lot of it is due to immigration. But you can also see they've got very big increases in employment as well. At the other extreme, we've got country down here like Italy with a very small, much smaller increase in labor force, a much smaller increase in employment. And pretty much all of these countries are on that black line that if you increase the labor force by 1%, the evidence is that employment goes up by 1%. And that suggests that actually our picture of the labour market should not look like the way I drew it before, but it should look like this, that the labour demand curve eventually is higher horizontal, that there is no limit to the level of employment that an economy can have. And what happens then when you increase immigration? What you see is wages don't change at all and employment goes up just to absorb the new people that you've got in your economy. So immigration now has no effect on wages or the employment of locals, it just makes the economy bigger. And that's very important. That says there are no costs, labour market costs from higher immigration. But it's also got another implication. There are no benefits to the locals either. Wages are exactly the same as before. And so you know, there's nothing in it for the locals. So that's about just changing the size of the, of the labor force. And you know what that says is that migration isn't the cause of unemployment, but it also says that it doesn't solve labor shortages. So last week I talked about two tribes, the anti migration tribe, and you would often hear from that tribe that migration causes unemployment. And I also talked about the pro migration tribe and from that we'd often hear the story that we need migrants because we've got labour shortages. The weird thing is that both of them are wrong and for exactly the same reason. And the reason is that migration adds more or less equally to both labour demand and supply. So when you've got unemployment, which is supply running ahead of demand, and you take away migrants, you reduce supply, but you reduce demand, you don't change the gap. Similarly, if you've got shortages, the demand running ahead of supply. Supply, you add supply. Yes, but you also add demand, you don't change the game. So both of these tribes are wrong for exactly the same reason, even though they almost always think the other side is wrong and they are right. So migration can also change the mix of the labour force. I think I'm going to have to go a bit quicker about this. So now we're going to talk about, imagine immigration changes. There are different types of labor think maybe of skills if you want, and there's an increase in the supply of one type of labor. And that what that does is it alters the balance of supply and demand for that worker type. And the story I've just given you about increasing in supply, having a matching change in demand that doesn't work anymore, I'm increasing the supply of people like me. People like me then have more income. But we don't just spend our income on the jobs done by people like me, we spend them on other things as well. So typically, what we would expect to find, and this is broadly what the evidence does find, that if you increase the supply of a particular type of labour that lowers wages for that type of labour, it can lead to lower wages for other types of labour that are similar, but it can actually lead to higher wages for other types of labour that, you know, you might work with and so on. So, and I think the evidence is broadly consistent with that prediction. But having said that, most studies find the wage effects of migration, both positive and negative, to be very small. And I think the reason for that is, again, because migration people tend to think that migration is much more important than it actually has been. And migration doesn't change the shape of the labor market as much as people think. So each of these dots here represents an occupation, a single job, which there's sort of roughly 350 in the British sort of official classification. And on the horizontal axis here we have the percent of total employment in those jobs. So the one furthest out to the right is that shop assistant. So shop assistant is the most common job in, in the uk. The second one is care assistant. So that's the sort of second dot. So what this shows you. So we have the percentage of employment in the labour market as it actually is. Now imagine, and this is not the policy that I've recommended, that we took all the migrants away and we were just left with the Brits. We said, how would this change the shape of our labour market? And so the vertical axis is what would be the share percent of employment if we took the migrants out in the different occupations. And the red line Here is the 45 degree line, which would be. It makes no difference whatsoever. And as you can see, it makes almost no difference. In fact, the correlation between these two scenarios is over 0.99. This is true not just in the UK, this is true in the US. That's true, even though lots of people think care assistants are totally dominated by migrants and we wouldn't have any care assistance at all if we didn't have migration. Again, it's not as true as people generally think. So I think that's the reason why the effects of migration on wages are found to be small. They just haven't changed the labor market as much as we generally think. But I think it would be a mistake to conclude from that that there could never be effects of migration on wages. So for example, if you went to the uae, to Dubai, you would find that full time domestic help costs perhaps 8,000 pounds per annum and most middle class households would have a lot of domestic help. If you went to those middle class households in a country like the uk, you would find they might hire a cleaner for a few hours a week. They, they do not have full time living domestic help. That's not because it's illegal in the UK, it's just because it's really expensive. And in the UK it would cost £40,000 plus per annum and that would have to come out of your post tax income. So why does full time domestic help cost so much more in a place like the UK than a place like Dubai? And the answer is very simple. It's a, the immigration and labor laws are different. So for example, you would not be able to bring in migrants as full time domestic help in the uk. And even if you did, you would have to pay them the minimum wage and comply with other UK labor laws. But imagine that we suddenly change the UK's laws to be like the Dubai's laws, that we could bring people in and we could, we didn't have to pay them the minimum wage. I think you would actually find quite a lot of British middle class households taking advantage of this. And as they did that, that would put downward pressure on the wages of British workers who currently work in those kind of jobs. So I think it's, you know, immigration can reduce wages, but I would say it doesn't have to. And I would say that one of the aims of migration policy should be to make sure that it doesn't okay? And we do. Okay. Migration and prices. So your material standard of living depends as much on what you can buy as your income. So prices matter as much as incomes. So we've got some evidence that migration does reduce the price of low skilled personal services in many countries. Though perhaps a suspicion that's because it reduces the wages of those workers, which may not be quite so good if you were one of those workers. But also there is evidence that, you know, adding population, which immigration does, as I've said, generally is going to increase housing costs, especially if you've got problems with increasing the supply of housing, which may be natural constraints, but may also be sort of man made constraints like the UK's planning laws. this point I want to have a little bit of a diversion to, to make an advert that actually sometimes, just sometimes, economists do have insights that other people don't. Not always, I should say. So when economists are thinking about the impacts of migration on living standards, they focus on the effect on people's incomes and the effects on people's prices. But when I was chair of the Mac, you would talk to lots of people and they would say, and some of the people you would talk to, they would agree though migration has had no effect on wages or prices. And I would think, well okay, there's no cost of migration, but there's no benefit either. And then they would say, oh, but that shows that migration just has benefits. And I would think oh, why is that? And eventually I came to realize that because the way they thought was that if they went to a restaurant and had a meal served by a migrant, they would think if we hadn't had migration I wouldn't have got that meal. But on the other side there'd be people who would think, say you applied for a job and a migrant got that job that you wanted. They would say, oh, that's a bad effect of migration because they've got a job that I could have had otherwise. And again, I think both of these people, both of the two sides are making the same mistake is that they're paying too much attention to the identity of the individuals who is living in a house, taking a job, serving you, whatever. And so when you should be focusing on the effects on incomes and prices and the way I try to persuade people of that is to say suppose you went to a restaurant and the person serving you suddenly noticed their left hand. Would you conclude we need more left handed people in the economy? If you went for a job and the left handed person got the job ahead of you, I'm left handed, you know, would you conclude we need fewer left handed people so I could have got the job? That sounds absolutely ridiculous conclusion to draw. Yet when it comes to migration, it's actually very common to hear that kind of thing. Okay, migration and profits. Very little research on this, which is really odd because when you're chair of the Mac, basically almost all your time is spent being lobbied by businesses for more liberal immigration rules. And one can only draw the conclusion from that, that there must be something in it for them. But we've got very Little academic evidence on that. And I'll talk more about that next week. I've got to try and persuade you some people to come back next week. Okay? Immigration and public finances. Do migrants pay more in taxes than they receive in welfare benefits and public services? And the answer is it depends on the migrants. It depends on how much migrants work, how much they earn, how healthy they are, their eligibility for welfare benefits. And some migrants are undoubtedly positive for the public finances, some are negative and some there's more debate about. And for that reason it doesn't make much sense to talk about the overall contribution. So just to get. This is quite a complicated area. I'll kind of show you a picture. This comes from what's called the distribution analysis produced by the treasury after every budget. It's not specifically about migration and it's a rather a simplistic representation of this. But basically we pay taxes and then we receive benefits in kind, health and education, things like that, and then receive welfare benefits. So income from the government and you know, so this shows you here those three components and it basically, you know, it shows you that and it shows the black dots are whether net you're paying more in tax than you're receiving in benefits and welfare payments. And what that shows is that basically in order to be paying more than you're getting, you need to be basically in the top 30, 40% of the UK's income distribution. So that's the point at which you begin to put in pay more tax than you take out. And so migrants who are sort of above that point long term are likely to be fiscally positive. Below they're going to be negative. But what makes a big difference is the welfare payments. So migrants when they first arrive in the UK are not eligible typically for welfare benefits. And kind of what you can see is that if you took out the welfare, which is the sort of middle pink bar from there you're going to be fiscally positive if you're much lower down the income distribution. In fact, probably if you're in, as long as you're not in the bottom 20%, you're going to be fiscally positive. And because some of these households have nobody in work, that means short run. If you have no eligibility for welfare benefits, you almost certainly anybody in full time work is going to be fiscally positive, but only because they're not eligible for welfare benefits. And unfortunately the time horizon that for example, the treasury traditionally uses for looking at fiscal consequences is fine years, which is the period before when migrants are not eligible for welfare Benefits. So the treasury has a long history of supporting migration policies on the grounds of them being fiscally beneficial, which when you look backwards and you look long run, have really been really poor decisions. And unfortunately, immigration in the UK has been used as sort of disguised borrowing because if you have a migrant who's fiscally positive, short run gives you more money now at the cost longer run, that's like what borrowing does. If you borrow, you have more money now, but then you have to pay it back. And unfortunately, the treasury also has ended up with immigration in the UK being disguised austerity because it doesn't account for higher government expenditure that follows population growth and the standard way in which it looks at it. So I think, unfortunately, you know, we've had a long history of getting this particular issue wrong. Okay, what about migrants? It's not just about the money and the public services. It's about, you know, people to provide them. A lot of people think migrants are more likely to work in the public services than everyone else. That is not true in the uk. It is true in health care, which is what people are probably talking about most of the time. But actually migrants are less likely to work in school teaching than Brits. They're less likely to work in public administration, less likely to work police and fire. So migration has reduced pressure on public services in some areas, notably health care, but it's probably increased it in others. Okay, finally community. Not finally, I need to be shutting up soon. Are you getting on my case? So, yeah, I am, sort of, yeah. Okay, Richard Layout sitting here. Most important personal factors affecting well being are health and human relationships. It's not just about money, basically. And immigration inevitably affects communities. And a common accusation is that immigration affects locals communities for the worse. This isn't really new. This is Benjamin Franklin in 1751. He's generally thought of as a federal, fairly liberal kind of a bloke. And he said, he wrote, why should the Palatine Boers. Palatine's words from a part of Germany. Boers was just a term of abuse be suffered to swarm into our settlements, herding together, establish their language and manners to the exclusion of ours. Why should Pennsylvania, founded by the English, become a colony of aliens who will shortly be so numerous as to Germanize us instead of our anglifying them will never adopt our language or customs any more than they can acquire our complexion. Oddly seem to think Germans and Brits had a different complexion. That sounds familiar probably to what people say today. And you know, today most of the focus is not on the Palatines. It's actually on Muslims. And so they're books like Christopher Caldwell's, Douglas Murray's, which basically, you know, are very critical of, of the rising share of Muslims in Europe. And so, you know, what is the truth in these claims? And it's really important to get this right because I think if you're alarmist about this, you actually create the conflict in fear. You actually feed the extremists who you say that you don't play. So I think Douglas Murray would think that he's fighting Islamism. I think he might well be actually strengthening. And the reason for that is that if you just imagine that this is how conflicts mostly start. There are two groups of people. Both groups of people have their extremists. The extremists are telling the moderates in their group, you'll never be accepted by the other group. The other group wishes you harm. And they would point to the extremists in the other group. And what they're saying is evidence of that. And, you know, we need to look after ourselves. And the more there are extremists in the other group, the more the message of the own group, extremists, is likely to resonate with you. And so you get a cycle that extremism can proliferate, even if the claims, or maybe especially if the claims are exaggerated. So being alarmist about this risks creating what you most fear. But on the other side, there risks from complacency as well, because there are threats from extremists in our society and if we ignore them, they may get stronger. So we're trying to find a path between complacency and alarmism. And I'm going to look now at Muslim versus non Muslim, because if I ignore that, then people say you're complacent. But I think there is a danger that focusing on that division is unduly alarmist. Okay, so one of the accusations against Muslims is that they are socially more conservative. They are socially more conservative, but they're not as socially conservative as many people think. So, for example, this shows you. And I'll speed up. Just talk about the left hand panel. The fraction of Western Europeans agreeing that gay men and lesbians should be free to live their own life as they wish. So over 80% of Western Europeans say that you'd find lower percentages, a lot lower in Eastern Europe and a lot lower in the US but that's what Western Europe says. If you look at Muslims, you find is lower, they are more socially conservative, but it's still a majority agree with this statement. And if you compare the Muslim migrants, so people who come from mostly Muslim countries which are even more socially conservative and with Muslim locals, so people who were born in the uk, you find that the Muslim locals are more liberal, that their attitudes are moving in the same more liberal direction as non Muslims have got. And again, if you look at, for example, this is a question, it's quite old, but people were asked to give the five values from a list of 16 that they thought most important for living in Britain. This shows you the UK born, the foreign born, and then I split non Muslim, Muslim as well. I think the overriding impression I have from that is just how similar people are. There are some differences, but they're just more or less the same. That the most common answers are tolerance and politeness towards others and respect for the law. And it's true that Muslims are more think respect for all faiths is important because they feel, sort of often feel disrespected. But on the whole this does not to me rise to the level of existential problem facing society. Okay, I'll shut up after this. Very quickly, crime and migration. The trouble is finished. This is in a way the most difficult one. So it's very difficult to discuss migration and crime in a balanced way. And the reason for that is the data is often not very good and even if it was very good, it'd be very easy to cherry pick. So it's almost certainly the case that the horrible crimes being done every day. People have been convicted of horrible crimes every day. A fraction of those get reported in the media and social media and come to people's attention. And those are what gets reported is very selective. If you, for example, look at the social media feed of Matt Goodwin, who's currently the reform candidate, was an academic, actually I met him 10 years ago. He seemed like such a nice young man at the time. He's now the reform candidate in the upcoming by election. He's always, you know, got a crime that's been some horrible crime that's been done by a migrant. I mean they are horrible crimes that have been done by migrants. But he's never putting on his feet a horrible crime that's been done by a non migrant, basically. So you could easily come a very misleading approach. So we know a lot of crime is committed by young men with little education and few labour market opportunities. And so I don't think it would be that surprising that if our migration is of that sort of, that's the profile, you'll get more crime but if we have more migrant nurses, who I think are pretty low crime group, I suspect that crime would go down. So this is sort of very difficult. Again, the us, there's good evidence, we have good evidence there that migrants are much less likely to commit crimes than Americans. Those American born other European countries don't look necessarily the same. Britain is probably equal. The data is pretty bad. But in quite a lot of European countries, the share of migrants among prisoners is higher than the share, quite a lot higher than the share in the population. And I think you can trace that to the demographic mix of the migrant population in those countries, because people there are people who are trying to weaponize the link between migration and crime. A natural tendency to push back against that has been to sort of what I think has been a pretty disastrous attitude, which is just to stick a head in the sand about it and just not a good example. Here would be an article on the left hand side. Most child sexual abuse gangs are made up of white men. Most of the population in Britain is white. It would be incredible if that was not true. That does not tell us anything useful about whether you know the identity of people who do commit child sexual abuse. And it's not going to convince anybody who's worried about that kind of thing. I think if you want to read about this, and I will try and shut up now, that you should read Louise Casey. She says the people who have actually refused to think about how to discuss these kind of issues have ended up making things worse, not better, because it hasn't gone away and it's just got worse. But it is a very difficult area. Okay, headline conclusions then. I really will shut up. I think if I had to summarise things, I think that both the benefits and costs of migration are often not as big as you might have heard. I think that's true for the economics, I think that's true for the culture. They're just people, but most of the time they're just like everybody else. Who the migrants are is probably more important than the number of how many migrants there are. Though I do think there are strong arguments for wanting to avoid rapid population growth. And just to try and get you to come back next week, next week is going to be about how we combine all this information into policy, what we should actually do. So I'll just stop there. Thank you. Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy. Lseiq asks social scientists and other experts to answer one intelligent question. Like why do people believe in conspiracy theories? Or can we afford the super rich? Come check us out. Just search for lseiq, wherever you get your podcasts. Now back to the event.
