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Professor Geraint Johnes
Professor of Economics at Lancaster University
T 020 7976 3516
Professor Geraint Johnes

June Director's Report

Authors: Professor Geraint Johnes

10 June 2014

The European elections last month pushed to the fore questions about migration. These were reinforced on polling day by the release of the latest statistics on immigration. These showed that the number of work-related visas issued in the last year has risen by some 10% - the bulk of this increase being in the skilled (tier 2) category. In the year ending March 2014, the total number of work-related visas issued was a little over 156,000. The government's target of reducing immigration to the tens of thousands appears to be slipping further away.

That might not be a bad thing. People migrate because they can benefit from doing so. To an approximation, workers get paid in line with their productivity. If their productivity is greater in one place than in another - perhaps because the equipment they have to work with is better, or because other resources are better, or because they are better managed - then the output of Earth Inc. rises, and we all benefit from that.

Of course, the world is not really quite so simple. Rapid movements of population bring about pressure points. Public services may be strained if the size of a local population is rising rapidly, and (leaving the economics aside for a moment) people take time to adjust to new environments and new neighbours. Leaving economics even further behind, people seem to believe that migration is bad for the labour market prospects of people who were born here; others suggest that it is bad for the public finances. These notions have been comprehensively debunked by many studies - see for example an early Work Foundation study on labour market effects, and the recent OECD report on the tax and benefit implications. Despite the evidence, these issues seem to remain a concern for many people.

At least some of the above issues mean that there is a need for managing migration, and that is exactly what the government's points system aims to do. For sure the system could benefit from some tweaks - it is not easy for smaller firms to navigate, and larger firms face challenges over its impact on intra-company transfers. But the underlying premise of the system seems sound.

The points system does not, of course, cover migrants from the European Union. Neither do the figures on visas reported above. While the policy position with regard to European migrants stays as it is, policy concerning migration from outside the EU has to flex to accommodate changes in flows of European migrants. This imposes an added layer of complexity.

Debates about migration tend to polarise, with one side arguing for open borders and the other for tight controls. This does not seem to be a very grown up way of going about things. We know that there are benefits to migration, and presumably these decrease (at the margin) as migration increases. We know there are, in the short term at least, costs. So it should be possible to inform the debate by forming an evidence-based view about the optimal rate of migration.

Policy-makers who wish to show some leadership on this issue might want to consider developing proposals that are based on evidence. They would then likely face the task of educating the electorate. But the benefits attached to getting this right - something that is unlikely to happen by accident - could be considerable.