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Economists should know better than to fuel misguided fears about immigration

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Author: Jonathan Portes

“There’s a good case for us to have strictly controlled trade with other countries for a few specialised goods we can’t make in the UK, but none for free trade.”

No serious economist would say anything of the sort – it ignores almost everything we know about international trade, or indeed how markets work in general.

But when it comes to immigration, Professor Paul Ormerod makes the identical argument.

Read more: Immigration fears are more economically rational than you think

Presumably he thinks that the UK benefits from the relatively free movement of goods, services and capital. But at the same time, he argues that we’d be better off if we only allowed in a “relatively small number of skilled people”.

We don’t need to speculate on the impacts of such a restrictive and illiberal approach – because we already have it. This is precisely the policy adopted by the current government when it comes to non-EU migrants.

The process for obtaining a “Tier 2” visa for a skilled worker is bureaucratic, expensive, and often arbitrary – and there’s an overall cap on the number issued.

We’ve seen the results in recent months – NHS hospitals and City firms having to withdraw job offers to qualified candidates for vacant posts, because the quota has been exceeded. The idea that this sort of clumsy, state-led central planning is the best way to maximise the benefits of immigration to the UK is laughable.

More broadly, Ormerod notes – rightly – that to argue that migration is good for GDP per capita, and hence individual prosperity, you need to show that it boosts productivity and innovation.

And basic economics and common sense suggest that it is likely to do just that.

Immigrants are self-selected, likely to bring different skills, talents and aptitudes, and both to compete with and complement those of us who are already here. We can see the positive impacts in sectors from our universities to the Premier League.

None of this will come as a surprise to City A.M. readers in London, which is by far the most productive part of the UK, in large part because of immigration.

But there’s also rigorous research (for example, recent analysis by the International Monetary Fund) that suggests that countries with higher levels of immigration – at all skill levels – see faster productivity growth.

Ormerod concludes with the obligatory claim that “large-scale immigration increases inequality”. Again, he cites no evidence, because there isn’t any.

Inequality soared in the UK in 1980s, when net immigration was relatively low. It hasn’t changed much in either direction since 1997, when immigration really began to take off. And a decade of research on the impact of immigration on jobs and wages has failed to find more than marginal effects.

Making immigration a scapegoat for low pay, poverty, or pressure on underfunded public services – sadly a common habit among our politicians – is at best a distraction from the real issues, and often considerably more sinister.

Economists should know better than to encourage them.

Source: http://www.cityam.com/288404/economists-should-know-better-than-fuel-misguided-fears

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