Examination of Witnesses (Questions 35
- 39)
TUESDAY 9 OCTOBER 2007
Professor Stephen Nickell
Q35 Chairman:
Good afternoon, not that you need any introduction. You have been
here a few times before if I recall.
Professor Nickell: One way and another, yes.
Q36 Chairman:
We are very grateful to you for coming along to help us. I do
not know whether you want to say anything to start the ball rolling
or whether you want to go straight into the questions.
Professor Nickell: Why do we not go straight
in?
Q37 Chairman:
I wonder if you could start us off then by saying how, in your
view, has recent immigration impacted on levels of wages and unemployment
in the United Kingdom and have these impacts been in line with
what labour economists would have expected?
Professor Nickell: There is a lot in that question.
If I could start with wages and distinguish between relative wage
effects, that is, comparing one group with another, and overall
wage effects, if we start with relative wage effects, it has to
be said, if you read the UK literature, that you would come to
the conclusion at the end that immigration appears to have little
impact on relative pay. But I would say that if you focused more
on occupations rather than regions and education levels, then
my researches suggest that there is something there, and in particular
it seems to be the case that the relative pay of those who work
in semi and unskilled services are affected by in-migration into
those particular sectors, in particular caring and personal services,
such as care homes, and unskilled services like cleaning. There
definitely seems to be an observed effect on relative pay in those
particular occupations which is related to the amount of in-migration
into those particular occupations. With regard to overall wage
effects, there is evidence to suggest that immigration has increased
flexibility in the labour market, reduced mismatch and by and
large increased downward pressure on pay overall at any given
level of economic activity. Unfortunately, there is no precise
quantitative evidence of this, at least in the UK, but there are
bits and pieces of evidence which are relatively persuasive and
there is quite strong evidence that this has happened in Spain
as a consequence of the in-migration there which, of course, is
somewhat larger than it is in the UK. So there is some evidence
to suggest that in-migration overall makes the labour market more
flexible and reduces the level of pay pressures even at given
levels of activity. As far as employment is concerned, again,
the effects that people have managed to detect in the data are
not very large. I would say on balance there is some evidence
to suggest that employment rates and participation are influenced
negatively by the level of in-migration in the shortish run and
among unskilled workers, but over the longer term those effects
would probably disappear. Overall, of course, migration inflows
initially tend to raise unemployment and hence reduce the upward
pressure on wages. This would tend to be offset by more expansion
in monetary policy and the aggregate outcome at the end would
not be significant at all, at least in the medium term, so you
could imagine a scenario where there is a flow of workers in,
initially unemployment goes up, downward pressure on wages, downward
pressure on inflation, monetary policy is loosened, some expansion
in the economy absorbs the extra workers and at the end the thing
looks much the same as it did at the beginning except there are
more people.
Q38 Chairman:
While you were saying that I was trying to relate it to what we
have got in written evidence from people like bus companies who
say they would like to employ local people but they simply cannot
get them, and they try and train them and they cannot. By reason
of what you were saying you are a bit sceptical about that, I
understand.
Professor Nickell: It is just hard to see in
the data. Of course, there are those sorts of stories and the
sceptic might argue, "We find it very hard to find people
at the pay we are prepared to give", and in that sense inward
migration loosens the labour market and enables people to be hired
more readily. Of course, there is lots of anecdotal evidence along
the lines of migrants tend to be more reliable, they need to work,
et cetera, and there is obviously an element of that. My argument
would be that has not shown up in any sense in the big picture
and there is some evidence in the big picture that a significant
flow of unskilled immigrants into a particular area does have
some slight negative impact on the native population.
Q39 Lord Sheldon:
What are the effects of immigration on British workers, in particular
ethnic minorities?
Professor Nickell: I am afraid I do not know.
I have no evidence on this question. It does not mean to say that
such evidence does not exist but I am afraid I am unaware of any
specific evidence of the impact of in-migration on the labour
market prospects of different ethnic groups. Of course, one can
say that, given that there is some evidence that unskilled immigration
has a somewhat deleterious impact on low skilled native groups,
then, insofar as we know that certain ethnic groups have a higher
level of unskilled than the average, those, of course, would tend
to be affected more by this than, obviously, those ethnic groups
which tend to be more skilled than the average.
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