The OECD's hard working migrants

The OECD reported last week that that after the financial crisis a greater percentage of immigrants were in work than native Britons.  This is not terribly surprising, because the Government's own figures show that most new jobs created in the Blair / Brown years went to people born overseas.  In London the figure is about 80%.

It's easy to work out the economic impact of immigration in broad terms.  Immigrants increase the pool of available labour and therefore bear down on its cost (that's why the CBI is so keen on it).  Lower labour costs mean lower inflation, which equals lower interest rates.

But lower interest rates mean cheaper debt, which means more debt and higher house prices.  A population that's growing faster than new houses are being built means higher house prices and more debt.  Higher house prices mean less money available for discretionary spending.  A huge amount of Britain's personal wealth is tied up in housing, a misallocation of resources which reduces disposable income and lowers the amount of money available for investment.

Britain is drowning under a tsunami of personal debt and has a chronic housing shortage.  Ironically, immigration contributed to that.  We would have had a financial crisis anyway, but it wouldn't have been so bad.

The OECD report has been spun in some parts of the media as showing what a great success the mass immigration of the last fifteen years has been.  After all, more immigrants are in work than Britons.  But stating the point in those terms rather begs the question, how do we calculate the full cost of working immigrants?  The OECD haven't taken into account the British people who would have got jobs if migrants hadn't got them instead.

Of course migrants will marginally increase the amount of economic activity, even if they don't bring any money with them.  More people tends to mean higher GDP.  But for every migrant that is working,  you have to add in not just the extra cost of the services provided to them and their families, but the services and benefits provided to the British person who the migrant kept out of a job.

It's worth remembering that a disproportionately high percentage of the British unemployed will be black or Asian Britons, the children of earlier generations of immigrants.  They will in many cases have been displaced by white people from Eastern Europe.

For every additional working migrant to be a net economic benefit to Britain you have to show either that they didn't displace a British person, or that even if they did, the net value of their tax receipts is greater than the cost of their consumption of services plus the welfare costs of the British person they kept out of a job.

Those are pretty hard to do.  As always with these things, the answer you get depends on the question you ask.