Examination of Witnesses (Questions 60
- 63)
TUESDAY 9 OCTOBER 2007
Professor Stephen Nickell
Q60 Lord Lamont of Lerwick:
Could I just come back to the economic arguments because I was
slightly struck by what I thought was a bit of a contrast between
your views as a macro economist and your views as a micro labour
market economist, because when you were discussing the macro scene
you were saying immigration obviously produces slack on the labour
market, relaxes pay pressures for a given level of activity, allows
more expansion in monetary policy, all that one would expect,
and yet when one comes to the impact of immigration on relative
wages you are saying one can hardly find it. There seems to be
a contradiction between those two, either the theory or the facts,
and I am inclined to believe the facts, although I would prefer
the theory. Might not the answer simply be that it is very difficult
in labour market statistics actually to discern what might have
been in other circumstances?
Professor Nickell: Yes, there is always a problem
with counter-factuals, although the technology, the empirical
investigation is getting better at trying to deal with that. For
example, if you have two contiguous regions and one has a lot
of migrants coming in and the other does not then not only have
you got "before and after" but you have got comparison
of the regions, and you think you might be able to say something
about the consequences of the inflow of migrants. I agree with
you that the apparent lack of wage effects which we tend to see
is a bit of a puzzle and we would expect them to be bigger, and
economists, having fertile imaginations, are busy thinking up
reasons why this might be so, but it cannot be said that they
have managed to evaluate those reasons to any great degree. So
we remain with a certain amount of a puzzle really. I think that
is only fair.
Chairman: I wonder if that is a good
point at which to stop this discussion with a certain amount of
puzzlement. Does anybody want to say any more?
Q61 Lord Layard:
The statement that everything is neutral with respect to the size
of the population, which basically you have been putting forward
and so did Bob Rowthorn, it depends upon the view that the capital
stock will respond to the change in the size of the population.
What is the evidential basis for that?
Professor Nickell: I suppose it is that bigger
countries have bigger capital stocks but perhaps that is a cheat.
You mean can you see—?
Q62 Lord Layard:
—Can you see that when more people go into Canada that that
has an effect?
Professor Nickell: I do not know the data. The
fact is the rates of change in the population are so small with
these things that it would be very hard to detect given that any
historical investment series just fluctuates enormously. I am
afraid I do not know the literature but I am sure someone has
found somewhere an area or a region where the inflow of population
has been enormous and has found further information on that, but
I do not know.
Q63 Chairman:
Can I thank you very much indeed for coming along and enlightening
us with your answers and leaving us with a few puzzles as well;
we are very grateful to you.
Professor Nickell: Not at all.
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