Immigration pluses and minuses

  • 40% of Fortune 500 companies were founded by first or second generation immigrants, and more than half of the nation’s billion-dollar startups have an immigrant co-founder
  • According to the National Science Foundation, only 17% of US bachelor degrees are STEM (science, technology, engineering, and maths) degrees – the percentage in China topped 40%
  • The US leads the world in awarding STEM doctoral degrees, but more than a third of those degrees are awarded to foreign students
  • Twenty years ago the US share of global venture investment was 90% – that number dropped to 81% in 2006 and to 53% in 2017
  • In 2016, China was home to six of the ten largest venture capital investments in the world


And other countries like the UK, Singapore, France, and Canada dedicate visa regulations explicitly to attract young immigrant entrepreneurs (n.b. Claude claims)

Not to mention China which, in addition to graduating far more STEM students than the US, is also devoting vast resources to its Made in China 2025 program to surpass the US in the production of key high-tech industries.

There are claims of fiscal benefits too

Consider the following extracts from an article in Moneyweek by James Lewisohn

September’s Migration Advisory Committee report on immigration to the UK from Europe claimed that European migration into the UK has caused only small impacts to our economy compared to other events such as the post-Brexit referendum devaluation of sterling, for example.

Its main conclusion appeared to be that the many immigrants to the UK from the EU (who arrived in waves, first after we opened our borders to Eastern European states in 2004, and again during the economic crisis from 2008 onwards) have made a much more fiscally positive contribution to the UK than immigrants from elsewhere. This fitted nicely with the views of most politicians and journalists and so generated a good few headlines along the lines of “Immigration myths that fuelled Brexit blown apart” (the Independent).

But is the conclusion really so simple?

It seems not.

The Committee’s chair, LSE’s Professor Alan Manning, gave evidence to the Home Affairs Select Committee

The SNP’s Stuart McDonald asked him: “Given the research, should the conclusion just be that the best thing for the UK to do is just carry on with free movement of people from the EU?”

The answer was a surprise – “No” replied Professor Manning

He and his team had, regrettably, failed to synthesise their argument:  “It’s all in there – but not brought together in one place”

What they actually meant is “lower-skilled migrants have been fiscally-negative – they make the UK a slightly lower wage, lower productivity kind of economy – any effects that they have on innovation are not positive – and, basically, if you ask what have been the benefits of this lower-skilled migration, there isn’t very much on the positive side of the ledger”

“That doesn’t come through very much in your report”, said Mr McDonald.  And indeed, it doesn’t. But it is very very important.

If Professor Manning’s conclusion is correct, and a lot of work has gone into it, then he may just have put the UK’s 14-year debate over the EU’s bedrock principle – free movement of labour – to bed

By the time of the EU referendum, the UK had seen more EU immigration, and vastly more low-skilled immigration, than any other country – it has, for example, been the primary reason why the UK’s foreign-born population, rose from 8.6% in 2003 to 12.3% even at a time when major economies such as Germany and Italy actually saw their foreign-born populations slightly contract

If, as many have argued, that has come with huge fiscal benefits for the UK, it isn’t necessarily a bad thing. But if it has not, as seems to be the case, a more restrictive policy post Brexit might be a very good idea

It could, for example, force Britain’s employers of low-wage labour to invest in greater automation, leading to greater productivity (n.b. already happening, even in advance of Brexit) and to real wage growth

That, surely, would be a result welcomed by both sides of the Brexit debate

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