WS MoreOrLess: Immigration

Summary

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Podcast Summary: More or Less – “Immigration”

Host: Tim Harford (BBC Radio 4)
Date: February 3, 2014
Episode Theme:
This episode of More or Less delves into the economic impacts of immigration, examining how statisticians and economists analyze whether immigrants “cost” or benefit a country. The conversation is balanced with expert insights and statistical rigor, followed by a light-hearted segment about applying statistics to wedding planning.

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Main Theme Overview

The primary focus of the episode is on the real economic impact of immigration, with particular attention paid to how it affects GDP, wages, and native and immigrant populations. The host and guests strive to untangle misconceptions using data and expert commentary.

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Key Discussion Points & Insights

1. Measuring the Economic Impact of Immigration

(00:19–01:16)

• GDP vs. GDP per capita:
  • GDP (gross domestic product) increases simply with more people, so to really assess economic benefit, GDP per capita (GDP divided by population) is a better measure.
    • Notable quote:
      • Tim Harford (00:43):

        “But that can't be the right measure here because, of course, the more people you have in a country, the larger its GDP will be. The new people will have jobs, they'll need feeding, they'll be spending money in shops. The question most people would want answered is how does GDP increase above and beyond that effect?”

2. What Studies Reveal about Immigration and Economic Output

(01:16–02:02)

• Thomas Liebig (OECD):
  • Most economic studies find that the overall impact of immigration on GDP per capita is “not particularly large.”
  • Sector-specific or group-specific effects can be significant, but national-level averages are small.
    • Notable quote:
      • Thomas Liebig (01:16):

        “Generally, most studies that look at the overall economic impact find that it is not particularly large, particularly if you look at it in terms of per capita impact on each native born…”

3. Who Gains and Who Loses From Immigration?

(02:02–04:13)

• Immigrants themselves almost certainly benefit by moving from lower-income countries to higher-income ones.
• Residents/Natives:
  • Some segments may benefit economically, while lower-skilled native workers might see lower wages due to increased competition.
  • Two academic perspectives discussed:
    • George Borjas (Harvard): Focuses on negative wage effects for native workers.
    • Giovanni Peri (California): Argues that immigrants can make native workers more productive due to task complementarity.
      • Example discussed: Migrant construction workers help native workers become supervisors, thus raising productivity.
  • Summary by Carlos Vargas Silva (Oxford):
    • The truth lies in between: Low-skilled natives may face negative impacts, but there are also productivity benefits and complementarities.
      • Notable quote:
        • Carlos Vargas Silva (03:50):

          “It is probably a bit of both. It is important to understand that there is a negative impact in salaries from migration and that that impact is concentrated on low skilled workers. But at the same time it is possible for migrants to make native workers more productive and to complement a lot of native workers. So it is a mixed bag.”

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Notable Quotes & Memorable Moments

• Tim Harford (00:43):
  “But that can’t be the right measure here because, of course, the more people you have in a country, the larger its GDP will be…”
• Thomas Liebig (01:16):
  “The impact (of immigration on per capita GDP) is not particularly large...”
• Carlos Vargas Silva (03:50):
  “It is probably a bit of both. It is important to understand that there is a negative impact in salaries from migration and that that impact is concentrated on low skilled workers. But at the same time it is possible for migrants to make native workers more productive…”

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Segment Timestamps

• 00:19–02:02 — How to measure immigration’s economic impact, with Thomas Liebig (OECD)
• 02:02–04:13 — Winners, losers, and academic perspectives, with Carlos Vargas Silva (Oxford)

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Light-Hearted Sidebar: Wedding Planning & Statistics

(05:03–08:43)

• Statistical Modelling for Guest Lists:
  • How many guests to invite when some won’t attend? Damjan Vukovic creates a probability-based model for his wedding guest list, factoring in geography and friendship strength.
  • The plan: Slightly over-invite (“like airlines do”) to hit the right number.
    • Memorable exchange:
      • Joan Coe (07:46):

        “We ended up with 105, which was within that perfect range of 100 to 110.”

      • Tim Harford (08:12):

        “The model was wrong, but you hit it on the nail anyway?”

      • Damjan Vukovic (08:33):

        “Yes, that's right.”

      • Joan Coe (08:39):

        “All the errors cancel out.”

      • Tim Harford (08:43):

        “The key message for all you statistical modellers out there is: If you can’t be right, then be lucky.”

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Episode Takeaways

• Immigration and the Economy: Most studies find the overall economic effect (per capita) is small, but within sectors and for specific groups, impacts can be significant—both positive and negative.
• Complexity Behind Numbers: Economic impacts vary based on assumptions, sectors, and which groups are studied. Both competition and complementarity between migrants and natives exist.
• Statistics in Everyday Life: As shown in the wedding planning story, stats and models are powerful—sometimes things work out even if all the assumptions don’t hold!

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For further reading:

• Damjan Vukovic’s account of statistically planning his wedding guest list appeared in Significance magazine.

Contact:
For more numbers debunked or explained, listeners are encouraged to email: [e-mail]

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Transcript

[Ruth Alexander]

This is the short edition of More or Less, first broadcast on the BBC World Service.

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Thank you for downloading from the BBC. For details of our complete range of podcasts and our terms of use, go to bbcworldservice.com podcasts

[Tim Harford]

hello and welcome to More or Less on the BBC World Service. I'm Tim Harford. In today's programme, a statistician tries to plan a wedding. But first, how much does immigration cost or benefit a country's economy? Economy. Ruth Alexander's been looking at this.

[Ruth Alexander]

Yes, and as I don't need to explain to an econo nerd like you, Tim, the standard measure of the size of an economy is gdp, which stands for gross domestic product.

[Tim Harford]

But that can't be the right measure here because of course, the more people you have in a country, the larger its GDP will be. The new people will have jobs, they'll need feeding, they'll be spending money in shops. The question most people would want answered is how does GDP increase above and beyond that effect?

[Ruth Alexander]

So, yes, and the trick is to divide GDP by the number of people living in the country. It's called GDP per capita when you do that, and a few studies have considered that question. I've been speaking to Thomas Liebig, the go to man at the Organisation for Economic Cooperation and Development. He says the impact tends to be quite small.

[Thomas Liebig]

Generally, most studies that look at the overall economic impact find that it is not particularly large, particularly if you look at it in terms of per capita impact on each native born and not at the growth. Of course, if you add 10% to the population, then you have a higher GDP, of course. But if you look at it in per capita terms, most studies don't find a particularly large impact. And again, these studies, they also depend on a whole range of assumptions. And of course the impact will also depend on how you look at things. There have been a couple of studies that looked at specific issues. As I said, the fiscal impact is one issue. Another specific impact is, for example, on the labor market, who benefits and who loses. And also these generally find that globally, of course, the impact is not particularly large. That of course does not mean that it can have a significant impact on some specific groups or in some specific sectors.

[Tim Harford]

Thomas Liebig so who does benefit then and who loses out?

[Ruth Alexander]

Well, there's one group which almost certainly does benefit from immigration and that's the immigrants, people who have moved from a poorer country to one which has more opportunities for them. But yes, what about the resident population? Perhaps some people feel the effects of immigration More than others. I've been speaking about this in a bit more detail to Carlos Vargasilva, an economist at the Migration Observatory at Oxford University in the uk. Two studies from the United States give us some insight, he says. One by George Borgas at at Harvard University and one by Giovanni Perry from the University of California.

[Carlos Vargas Silva]

Well, in the case of Borjas, basically his main point is that migrants move to the United States and they reduce the wage of competing workers and they actually gain a lot from migration because they go from working in a low income country to working in a high income country. So they benefit from migration and at the same time, employers are going to benefit from migration because they're going to pay lower wages than before. But native workers are going to be competing with those migrants and they're going to be negatively affected. Their wages are going to be lower.

[Ruth Alexander]

But while George Borjas emphasizes lower wages because of competition from immigrants, Giovanni Perry's research looks at complementarity between migrants and native workers. The migrants, he argues, make native workers more productive.

[Carlos Vargas Silva]

One example that he uses is of a construction supervisor. Before you can have a native worker doing construction work, but then you have more Mexican workers going in there working in construction and then this native person becomes a supervisor, so his supervisor the other workers. So that person has become more productive because of the existence of the migrant workers.

[Ruth Alexander]

What do you reckon of the two positions? Do you think that maybe a bit of both is probably true?

[Carlos Vargas Silva]

It is probably a bit of both. It is important to understand that there is a negative impact in salaries from migration and that that impact is concentrated on low skilled workers. But at the same time it is possible for migrants to make native workers more productive and to complement a lot of native workers. So it is a mixed bag. There's some compet in terms of works and at the same time there's also complementarity.

[Tim Harford]

Carlos Vargas Silva and our very own Ruth Alexander. Thank you, Ruth. Now, there must be something in the air because I've received a few wedding invitations recently, all of them several months in advance. But here's a tricky problem. If you have a wedding venue with a fixed capacity, how many people should you invite when you know that some people won't accept? This calls for a statistician and his name is Damjan Vukovic. He was planning his marriage to Joan Coe in Melbourne, Australia and decided that the answer to his problem was statistical modeling. So did Damyan's spreadsheet help make that special day even better? I caught up with Damyan and Joan to find out and I began by asking Joan to outline their guest list conundrum.

[Joan Coe]

We were doing most of the wedding planning from the uk, actually, we'd spent the last four or five years in the uk and we had lots of friends there. And we had lots of friends who had chosen to do their first jobs in the US or their research in the us. And we both are from immigrant families. So the guest list had people all around the world. And while it's easy to work out if people in Melbourne, our hometown, could come to the wedding, it was a much more difficult task of working out what proportion or how many of the overseas guests would show up. So the challenge is to pick the right number of invitees so that we could get all our friends there, but not to overshoot the mark. And to stop my parents from inviting their friends willy nilly as well.

[Damjan Vukovic]

Yes. So one of the constraints for us was we picked a venue and we could only fit up to about 110 people comfortably. However, we had many more people than this that we wanted to invite. So we wanted to do what airlines often do, which is overbook, but do it in such a way that it wasn't very risky.

[Tim Harford]

But hang on, what's the problem here? Why not just mail out the first batch of invitations, wait for replies and then send out a second round and maybe a third round?

[Damjan Vukovic]

That's certainly one way to do it. But sending out invitations and getting replies, that actually takes a long time because some people don't reply. And then suppose you want to send out the next batch, you have to go and chase them down. And the other problem is some people might get an invitation in the second round. And then if they're comparing notes, they might wonder, oh, what's going on here? Are we not in the best tier of friends, so to speak?

[Tim Harford]

The squeeze is on, then the venue is limited to 110 people. The guests might be coming from almost anywhere in the world. And Joan and Damian have given themselves only one shot at this. Damian and Joan listed all the people they might want to invite to their wedding. They divided them into categories, depending on how far away they were and how firm the friendship was. Then estimated the probability that a guest in each category would show up. They made some other assumptions too. For instance, that couples would either both come or both stay away, that there were no other influences, such as FA cup finals, high airline prices, or rival weddings, which might simultaneously influence lots of guests to stay away. As Damyan and Joan waited for the acceptances to drop through the letterbox, they were confident that Statistically speaking, Having posted exactly 139 invitations, successful was almost certain. So 100 acceptances would be too few, 110 would be too many. How many people finally did show up in the end?

[Joan Coe]

We ended up with 105, which was, you know, within that perfect range of 100 to 110.

[Tim Harford]

That is brilliant. A triumph for statistics. Well, hang on, hang on, hang on, hang on, hang on. Tell me again, Joan. 105 people turned up, but how many of them were in your original spreadsheet?

[Joan Coe]

Oh, I think it was a little bit less. I think it was 97 in the end.

[Tim Harford]

What? What happened?

[Joan Coe]

We had that problem that weddings often have people showing up who probably didn't get that invitation in the first round. So I think you should always have a buffer for people with new partners that you didn't know about or friends or family that your parents have accidentally invited.

[Tim Harford]

So the model was wrong, but you hit it on the nail anyway?

[Damjan Vukovic]

Yes, that's right.

[Tim Harford]

A triumph for statistical modeling.

[Thomas Liebig]

Excellent.

[Joan Coe]

All the errors cancel out.

[Damjan Vukovic]

That's right.

[Tim Harford]

Joan Ko and Damian Vukovic. So the key message for all you statistical modellers out there is if you can't be right, then be lucky. And you can read more about Damyan's number crunching in Significance magazine online. But many congratulations to the happy couple. If there are any numbers you'd like us to check or explain, do please email us at more or lessbc.co.uk and you can download this program and many others for free at our website, bbcworldservice.com More or less

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