Some myths leave us to wonder who dreamed them up. Other myths we can observe as they are born. Last week a UK minister created an economic myth about immigration to his country, and it's useful to watch how and why it arose.
First the facts: In January, an expert research team called the Migration Advisory Committee (MAC) released a rigorous review of the economic effects of immigration to the UK. The MAC found no association between UK unemployment and immigration to the UK from outside the EU, over the whole period 1975-2010. But when they separated out the last 15 years of that period, 1995-2010, the MAC found that there was a positive association between unemployment and immigration from developing countries in particular. During those years, for every 100 working-age non-EU immigrants who arrived in a particular UK region in a particular year, 23 fewer UK natives were employed in that region in that year.
But -- as the MAC authors know -- the fact that two things happen at once does not mean that one caused the other. If you get sick on the same day you purchase a toy, it does not mean that the toy caused you to get sick. Both the sickness and the toy purchase could have been caused by something else: visiting your sick nephew.
Likewise, no association between unemployment and immigration shows that immigration caused a single job loss for a UK native. For example, old businesses and industries are constantly declining and new ones arising. UK native employees in the old businesses might not be willing or able to work in the new ones, while many immigrants are willing and able -- especially in times of rapid technological change, such as the past 15 years. A pattern like that could explain a positive association between UK native unemployment and immigration, by place and year, even if the true effect of immigration were to reduce native unemployment -- for example, by raising the return to investment in new businesses.
The MAC researchers understand this well. They write: "Our findings should therefore be considered as estimating the association between migration and the native employment rate rather than the impact of migration on the native employment rate" (p. 62).
Sadly the UK Minister of State for Immigration, Damian Green, saw the MAC report and badly misread it. He certainly has a responsibility to read every page of a landmark report so critical to his job. But he appears ignorant of the authors' definitive statement above. Last week, in an important speech on the economic effects of immigration, he said:
Do immigrants displace British workers in the labour market? The MAC research showed that in certain circumstances there can be displacement of British-born workers by non-EEA [European Economic Area] migrants, up to a level of 23 displaced for every 100 additional working age non-EEA migrants... This analysis gives us the basis for a more intelligent debate. It supports a more selective approach to non-EU migration. The old assumption was that as immigration adds to GDP -- national output -- it is economically a good thing, and that therefore logically the more immigration the better, whatever the social consequences.
I'm sorry, Minister, but the report you cite simply does not say, does not find, and does not suggest that non-European immigrants "displaced" UK workers. It does not even find that such displacement happens "in certain circumstances" or "up to a level of" 23 per 100.
In fact, the report's authors go out of their way to state that their evidence must not be interpreted as clear evidence of any displacement, any impact of migration on native unemployment. They do this because the authors know, and they unequivocally state, that the association they find is also consistent with several different economic phenomena that are not caused by immigration. They also know that non-EU immigrants are much less likely to be close substitutes for UK workers than immigrants from the EU; European workers tend to be similar to each other. This too suggests that the finding of zero association between UK native unemployment and EU immigration, and the positive association between UK native unemployment and non-EU immigration, both represent something other than 'impacts' of immigration on unemployment.
If that wasn't clear enough, the MAC flatly concludes that the available data does not allow for an accurate accounting of the economic costs and benefits of immigration for UK natives: "On balance it is clear that, on the basis of current data and knowledge, any attempt to calculate the NPV [Net Present Value] of migration policies will be subject to considerable uncertainty and likely biases" (p. 98).
But the minister's myth propagates anyway, with help from a docile press. The BBC article on the minister's speech, for example, simply quotes the minister's false interpretation of the MAC report, without qualification. The article does not bother to interview any of the MAC report's authors, who could clarify what they did or did not say. The BBC article does bother to interview anti-immigration activist Sir Andrew Green, who (shocker!) shares the minister's sadly fictional interpretation of the MAC report.
So we're likely stuck with this unfortunate, mutated thought, to be quoted over and over again by people who have various reasons to wish there were fewer foreigners around them. For years you'll hear that a commission of top experts proved that immigrants massively displace UK native workers. Every time it's said, it will be false.
What does the best economic research show? As I've discussed in a peer-reviewed article in a journal of the American Economic Association, barriers to migration from developing countries are far and away the most impoverishing obstacle to the global economy. Even slightly greater labor mobility out of developing countries would add trillions of dollars to the world economy, and most of those gains happen in countries of destination like the UK.
No economic effect of immigration on nonimmigrants comes close to meaningfully offsetting those gains, including in the UK (a good starting point, as highlighted by the MAC, is the work of Christian Dustmann at University College London). That clear finding of the best research is not called into question by the MAC report, and its authors know that. But for politicians and journalists to know that, they would have to read the whole report. And who has the time?
Update: To focus this post I did not address the question of whether or not the MAC report clearly establishes even the association between non-EU immigration and UK unemployment. Ian Preston of University College London insightfully critiques this aspect of the MAC report in this post from the Centre for Research and Analysis of Migration.
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