“All studies show migration has significant economic benefits… we must robustly refute the false narrative migrants are a drain on resources. Without migrants, many sectors of the Irish economy would struggle to function.”
“All studies show…”
Well, apart from this one study….
Borjas 2003, whose “analysis indicates that immigration lowers the wage of competing workers”. Basically, this study found that by breaking the studied population down by educational attainment and level of work experience then comparing like for like, immigration was seen not to have a uniform impact across the population, but had the most negative effect on lower skilled native workers and those who were in direct competition with immigrant labour.
-In a follow-up piece written in 2004, Borjas noted also that the reductions in earnings created by immigration happen whether the immigrants are legal or illegal, permanent or temporary, and that younger migrants tend to compete more with younger native workers than older native workers. To quote from it “What past immigration has done […] is to depress wages and increase the profits of the firms that employ the immigrants. The labor market effects documented in this paper suggest that the proposed temporary worker program will expose many more Americans to competition from foreign workers, will generate higher earnings losses for workers, and will lead to an even greater redistribution of wealth from labor to those who buy and use immigrant services”.
-In a 2013 piece, Borjas estimated that the presence of immigrant labour in the US economy cost the native workforce approximately $400 billion a year, whilst increasing the income to those businesses who used immigrant labour by $437 billion a year.
– Similar sorts of conclusion could perhaps also be drawn from this 2010 study – Immigration and Construction: Analysis of the Impact of Immigration on Construction Project Costs – which specifically looked at the Washington DC area – where they measured that approximately 55% of low skilled construction labour comes from illegal immigrants. The study concluded that efforts to curb the reliance on the illegal immigrant labour could push overall labour costs up by 18% – meaning that without the cheap, disposable, unregulated workforce, bosses might actually to have pay their workers better! Scary thought!
As has been seen in more recent years though, immigration can and indeed does also affect higher earning, higher skilled industries as well. A 2017 study by the US’ National Bureau of Economic Research found that legal immigration through the H-1B programme – which is aimed specifically at high skilled labour – had the effect of lowering the wages of competing native workers in the computer science field by up to 5.1% between ’94 and 2001. The study notes that simultaneously, this immigration helped bring down the cost of IT consumer goods and substantially increased profits for the businesses.
In a 2017 article for well-known-far-right-mouth-piece, The Huffington Post, Professor Norm Matloff, a computer scientist from UC Davis, suggested that Big tech firms exploit the immobility and limited residence rights of H-1B workers to pay them lower wages. Citing a congressional report, Matloff’s article stated that H-1B workers “received lower wages, less senior job titles, smaller signing bonuses and smaller pay and compensation increases than would be typical for the work they actually did”. Further, citing research from multiple universities, Matloff noted that the foreign workers attracted by the H-1B visa program tend to be weaker than the equivalent American workers they displace – leading to, quote, “immense” harm to the US’s economy, ability to innovate and general national interest.
OK, but all these studies are focused on the USA, in Europe surely it’s a different experience with immigration, right?
Similar to the findings of many studies on the American experience, Oxford University’s Migration Observatory concludes that most studies pin migration as making a very minimal positive net contribution to the UK economy.
Whilst there is no unified, agreed way to measure the net fiscal impact of immigrants compared to natives, the Migration Observatory notes that the contribution made to the UK economy seems to vary quite considerably across different groups of migrants. To quote:
” Studies consistently find that the net fiscal contribution of the current population of EU-15 migrants (which are the Western European states that were members before 2004) is positive, while that of non-EEA migrants is negative. In contrast, the fiscal contribution of EU10 migrants (the mostly Eastern European post-2004 EU accession states) is contested, with some assumptions giving positive results and others negative results”.
These conclusions are reflected in other studies, such as in a 2014 report for the Centre for Research and Analysis of Migration.
Separate studies from Denmark and the Netherlands that broke down immigrant groups into western and non-western categories both found that non-western migrants were a net fiscal cost to their respective societies, rather than contributors. Somewhat similarly, a 2014 paper found that in Norway, migrants from high income countries tended to have outcomes similar to natives, however migrants from low income countries tended to, over the course of time, have lower employment rates and higher usage of social welfare systems.
A 2003 study of EU countries concluded that the addition of 100 immigrants to the workforce leads to 83 job losses for native workers – particularly in states with high protections for local workers – who may not be as easy to dismiss as foreign workers.
A 2013 study from France showed that despite that country’s rigid laws governing wages, non-naturalised immigrant workers were more likely to accept longer hours, more painful conditions and lower wages – often because they have little choice but to accept such conditions. This in turn leads employers to often replace native workers with immigrant workers, who they can treat more poorly.
Studies from the UK also show that many immigrant groups tend towards lower paying work, even when they possess relatively high levels of education from their home countries, meaning that much of the skills they bring are often being under-utilised.
A somewhat cautious 2008 UK House of Lords report noted the possibility that immigration could affect employment opportunities for young people and may negatively affect the government’s willingness to invest in training and apprenticeships for its own citizens. The report also concluded:
” In the short term, immigration creates winners and losers in economic terms. The biggest winners include immigrants and their employers in the UK. Consumers may also benefit from immigration through lower prices. The losers are likely to include those employed in low-paid jobs and directly competing with new immigrant workers”.
In a similar vein, a UK Home Office report from 2010 acknowledged that:
“migration is more likely to increase wages at the top of the distribution, and reduce wages at the bottom of the distribution. Consequently, migration may have caused the pay distribution to become more unequal than it otherwise would have been.”
In plain language: the rich got richer, the poor got poorer.
One notable area in which immigration has affected the UK job market is in nursing, where the case is often made that immigrants are doing jobs that natives won’t do and that without migrant workers, the healthcare service would cease to function. But to quote from a 2004 paper by David Coleman and Robert Rowthorn:
“The problem in the end boils down to wages and conditions. As the OECD noted with respect to nursing: “The problem is not so much a shortage of nurses as a shortage of nurses willing to work under the conditions being offered to them” (OECD 2003a: 23). When employers in the south of England say that they cannot get workers to perform menial tasks, what they often mean is that UK local workers will not accept, or stay in, jobs at the kind of wages and conditions that they are offering. In this case, the problem is not an absolute shortage of labor, but a shortage of cheap labor”.
Alright, so that’s Europe quite generally, but the original tweet quoted was in reference to Ireland; what’s the story there?
Unfortunately, the information for Ireland is perhaps not as extensive as with other countries. One study that was based on a similar methodology to that used by Borjas, mentioned earlier in this video, found apparently contradictory results. Depending on how the data was broken down it was possible for the study’s authors to find both evidence that immigration had a negative effect on the wages of low earners, and that it had the opposite effect. It’s difficult to know what conclusions to draw from this particular study, which the authors themselves acknowledge. Perhaps Ireland’s economy in the years they studied was unusual, perhaps there are factors involved that this approach misses, perhaps there was a problem with how the study was executed. Perhaps none of these things.
Beyond this though, we do know that there are in fact some familiar patterns in the Irish economy.
Almost half of migrant labourers are in low paying work. Much of that migrant workforce is highly educated, but working at a lower skill level than they’ve been educated to. On average, migrant workers also seem to be worse paid than natives, particularly better educated migrants. As in other countries, economic impact varies between different migrant groups: for instance western European migrants (from EU15 countries) tend to earn the same sort of money as Irish natives, whilst Eastern Europeans are worse paid, and Africans are much more likely to be unemployed.
A 2013 paper noted the declining share of national income going to labour, relative to capital. In short, what this means is more money going to businesses and established wealth compared to the wage earnings of ordinary workers. Amongst a wide range of likely factors negatively affecting this, the paper’s authors included the effects of immigration on wage inequality.
Ireland also the highest reliance on foreign medical professionals of any OECD country in Europe, with almost 2/3rds of newly registered doctors in 2018 having qualified outside of Ireland, whilst a 2017 report showed 28% of foreign trained doctors in Ireland came from Africa and 20% from Pakistan. Meanwhile, many native trained doctors and nurses are opting to emigrate in order to find work that pays them enough. Notably, a recent and quite prominent campaign by Irish-born nurses working abroad pressured the Irish health service to provide them with better pay and conditions in their native land, in order to ‘give them a reason to come home’.
Although some acknowledgement has been made by academics of the potential pitfalls of immigration for the native working populace, one might say a general ideological commitment to immigration appears to persist throughout Irish academia, much as it does the Irish political and financial establishment – the latter of which are much less shy than others about stating the effects of immigration on wages.
A recent report from the Irish Central Bank candidly noted that immigration to Ireland prior to the economic crash of 2008 had a ‘wage dampening effect’. Whilst noting also that net immigration drives up rent and house prices – a major social problem in Ireland at present, the report also suggests that Ireland might currently need more migration to drive down wages, if it is to avoid ‘overheating’ in the economy.
Although it seems common for people to focus on the net benefit of immigration to the economy, it’s debatable how useful it really is to look at things in those terms. Whilst it’s certainly useful for businesses and research innovation to have an easy inflow of highly skilled people, the reality is that not all types of immigration are the same, and the effects of immigration are not felt uniformly across society.
The oft heard case also that western economies need immigration to ‘fill jobs natives won’t do’ has questionable merit – and in some cases can be demonstrated as untrue. Further, immigration may lead to native workers, particularly younger workers, being under-utilised at their skill level and under-trained for the actual workforce, and in some cases feeling the need to emigrate to find suitable work.
Calculating the full cost of immigration can be difficult, for example which portions of state expenditure to account to the pre-existing population or the newly arrived, the costs of integrating people from new cultures, the need to expand all manner of infrastructure that results from a growing population, the possible effects on social cohesion, the cost of living (i.e. rent and housing) and so on, weighted against the potential benefits gained from new innovations, new businesses etc. What is a little more clear cut is who particularly benefits from having immigration – who, in the main, profits directly from immigration. Big businesses, and those who are already wealthy.
Professor Borjas, who was mentioned near the very start of this video, summarised it thusly: “Immigration basically hurts people who compete with immigrants; and people who use immigrants – whether it be employers, or consumers, or upper middle class Californians who have a gardener and a maid and so on – those are the people who gain from immigration. So it’s really redistribution of wealth, at heart. When you think of it that way, you understand the political dynamics of this much better”.
This video has focused almost entirely on the economic aspects of immigration, and left out any cultural, political or other concerns that surround it. Whilst that was very deliberate, I feel I should close out with a more general criticism of thinking only in those terms. Whilst studies can be found that conclude immigration can bring a net fiscal benefit – even if it’s often only very minimal – if immigration was in fact profitable, is it really actually worth it? As we’ve seen it’s more important to ask ‘who benefits’ than to look at it in aggregate, but it’s important to also ask why economic growth is such an all-consuming concern of our modern culture. Our society’s near religious devotion to ensuring an ever-expanding GDP, even if it’s at the expense of our communities, our environment, our culture etc, is actually quite a poisonous worldview. In the words of the author Edward Abbey ‘Growth for the sake of growth is the ideology of the cancer cell’. In the future I hope to focus a little more on discussing the consequences of our modern world on our societies, our mindsets and our environment; but I’ve shown here that even on the terms we’re supposed to value things that the claims often made to justify the way things are, are actually far less clear-cut than they would have you think.
Music at start:
Autumn Day Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 3.0 License
THE LABOR DEMAND CURVE IS DOWNWARD SLOPING: REEXAMINING THE IMPACT OF IMMIGRATION ON THE LABOR MARKET George J. Borjas 2003
The Fiscal Impact of Immigration in the UK – 18 FEB 2019 Oxford University Migration Observatory
Increasing the Supply of Labor Through Immigration Measuring the Impact on Native-born Workers
Immigration and the American Worker – Borjas 2013
Immigration and Construction: Analysis of the Impact of Immigration on Construction Project Costs
Sabrina K. Golden, Ph.D. and Miroslaw J. Skibniewski, Ph.D.
Understanding the Economic Impact of the H-1B Program on the U.S. John Bound, Gaurav Khanna, Nicolas Morales NBER Working Paper No. 23153 – Issued in February 2017
“Trump Is Right: Silicon Valley Is Using H-1B Visas To Pay Low Wages To Immigrants”
The Economic Effects of Immigration into the United Kingdom
Coleman, Rowthorn 2004
2008 house of lords report:
“The available evidence suggests that immigration has had a small negative impact on the lowest-paid workers in the UK, and a small positive impact on the earnings of higher-paid workers. Resident workers whose wages have been adversely affected by immigration are likely to include a significant proportion of previous immigrants and workers from ethnic minority groups.”
THE FISCAL EFFECTS OF IMMIGRATION TO THE UK
Christian Dustmann and Tommaso Frattini
Immigration and the Dutch Economy
Hans Roodenburg Rob Euwals Harry ter Rele
The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark
Marianne Frank Hansen, Marie Louise Schultz-Nielsen, Torben Tranæs 2015
Immigrants, Labour Market Performance and Social Insurance
Bernt Bratsberg Oddbjørn Raaum Knut Røed 2014
PROTECTIVE OR COUNTER-PRODUCTIVE? LABOUR MARKET INSTITUTIONS AND THE EFFECT OF IMMIGRATION ON EU NATIVES*
Joshua D. Angrist and Adriana D. Kugler 2003
The Impact of Immigration on Native Wages and Employment
Anthony Edo 2013
“We find that the majority of post-enlargement migrants from the new member states have found employment in low paying jobs, despite some (especially Poles) possessing relatively high levels of education.”
Poles Apart? EU Enlargement and the Labour Market Outcomes of Immigrants in the United Kingdom
The Economic Impact of Immigration – report 2008
There are two impacts that net migration could have on wages: first, by expanding the labour supply, it might have an adverse effect on the level of wages overall; second, without affecting the average level of wages, it might have impacts on the wage distribution – the spread of wages from the most highly paid at the top to the least well paid at the bottom.
Estimating the Impact of Immigration on Wages in Ireland Alan Barrett Economic and Social Research Institute and IZA Adele Bergin Economic and Social Research Institute
Elish Kelly Economic and Social Research Institute
https://www.tcd.ie/Economics/assets/pdf/dp4472.pdf (mixed results produced from borjas method)
2015 Almost half of migrant workers in Ireland’s low-pay sectors earn less than minimum wage
The Immigrant Earnings Disadvantage Across the Earnings and Skills Distributions: The Case of Immigrants from the EU’s New Member States
Barrett et al 2008
Ireland’s Recession and the Immigrant-Native Earnings Gap
Barrett et al 2016
Labour’s declining share of national income in Ireland and Denmark: the national specificities of structural change
Eoin Flaherty, Seán Ó Riain
Almost two-thirds of doctors on medical register hold qualification from outside Ireland
Many young doctors choosing to work abroad
Ireland must address growing reliance on foreign doctors, RCSI
Migration in the Irish economic
Mac Éinrí, P.
Birth rates, immigration and culture
Irish Central bank quarterly report QB3 July 2019
There is no single “correct” estimate of this impact. Results of existing studies all depend on the methodology and the assumptions researchers must make (for example, about whether to include the costs of educating UK-born children of immigrants).
George J. Borjas: Costs of Immigration – Economics Roundtable – QUOTE 23:00 about benefitting the rich – 26:00 quotes on welfare
ESRI: Immigrants at Work
Immigration into the Republic of Ireland: a bibliography of recent research
politicians and tone of debate on migration consistently more pro, less polarised than in other EU countries
Modelling Overheating Risks in the Irish Economy
Thomas Conefrey, Gerard O’Reilly and Graeme Walsh
This study provides novel empirical evidence for the effect of ethnic minorities on the earningss of native Dutch workers. Using two data sets, various estimation methods and disaggregationss of the labour force, it is shown that immigrants have a small effect on
thee wages of natives from various skill and gender categories. Only the wages of low skilled Dutch workers are adversely affected by immigrants.
Absorption of immigrants in European labour markets. The Netherlands, United Kingdom and
Norway – Zorlu, A 2002
Labour market careers of immigrants in Germany and the United Kingdom 2004
The Performance of Immigrants in the United Kingdom: Evidence from the GHS – Brian D. Bell 2003
“Our analysis of relative wages shows that the main group of disadvantaged immigrants are blacks who have significant foreign work experience.”
THE ECONOMIC SITUATION OF FIRST AND SECOND-GENERATION IMMIGRANTS IN FRANCE, GERMANY AND THE UNITED KINGDOM* Yann Algan, Christian Dustmann, Albrecht Glitz and Alan Manning
“Their labour force participation rate for those aged 15 and over stands at 73.9pc compared with 59.5pc for Irish nationals.
Between 2009 (when figures are first available) and 2017, 237,000 people with third-level degrees emigrated, while almost 300,000 immigrated.”
Calling migrants: the Irish jobs market needs you