1 / 14

Wider economic impacts of immigration

Wider economic impacts of immigration. Max Nathan LSE | SERC | NIESR LSE London roundtable, 5 October 2012. What I’m going to talk about. Demographic context: UK and London Economic context: three places to look for impacts Evidence: London and beyond Emerging messages. 2.

carolynlee
Download Presentation

Wider economic impacts of immigration

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Wider economic impacts of immigration Max Nathan LSE | SERC | NIESR LSE London roundtable, 5 October 2012

  2. What I’m going to talk about Demographic context: UK and London Economic context: three places to look for impacts Evidence: London and beyond Emerging messages 2

  3. Population change in the UK Source: ONS (2011) 3

  4. London Source: Hall (2011) 4

  5. Economic foundations Importance of human capital, ideas to long-run growth Mobile people, intermediaries help generate / diffuse ideas Globalisation of products, services and research Complexity of supply chains, management => opportunities for people, groups who enable market access, co-ordination Economic / productivity-enhancing role of cities – and large urban consumer markets Cities also have biggest migrant stocks => amplifies impacts? 5

  6. Three places to look Labour markets–short term and long term effects Production – entrepreneurship, innovation, market access Consumption – goods and services, housing Multiple channels, levels for wider impacts of migration Need to try and distinguish these 6

  7. Labour markets Statics – neoclassical models predict zero average effects. Possible welfare losses to e.g. low-skilled (Dustmann et al 2008) Dynamics – some ‘low-road’ employers may become ‘migrant-dependent’ (Green 2007, Lewis 2011) UK studies – small/zero average effects; some negative effects on low-skilled <= casualisation of low-wage work (MAC 2012, Cook et al 2011, Nathan 2011, Nickell and Salaheen 2008) London studies – clear ‘migrant division of labour’; some evidence of downwards wage pressure for low-skilled (Wills et al 2010, Gordon and Kaplanis 2012) 7

  8. Entrepreneurship Migration may pre-select smart / driven people (Borjas 1987) ‘Middleman minorities’ and transnational entrepreneurs can leverage home-market knowledge(Bonacich 1973, Honig et al 2010) Entrepreneurship may also be a reaction to exclusion London studies – migrant firm founders more likely to be ‘proactive’ entrepreneurs (Nathan and Lee 2011) Barriers and challenges to scaling, ‘going formal’. Many factors shape entrepreneurship, not just migrant status /ethnicity (class, education, family) (Basu 2002, 2004; Sepulveda et al 2011) 8

  9. Innovation Firms may benefit from workforce / management diversity – a wider mix of skills/views is good for innovation But diverse teams may have lower trust, at least in the short run (Page 2007, Alesina and La Ferrara 2004) Several firm-level studies tend to find small, net positive effects of workforce diversity on innovation (Trax et al 2012, Ozgen et al 2011, Parrotta et al 2011, Ostergaard et al 2011, Mare etal 2011) London studies – small diversity bonus from diverse workforce and top teams. Operates across all sectors, not just the knowledge economy (Nathan and Lee 2010, 2011) 9

  10. Market access / trade Benefits of sameness – co-ethnic networks improve information flow, raise trust. Can help domestic firms access new markets / organise international production systems (Saxenian and Sabel 2008, Docquier and Rappaport 2011) International studies find ethnic networks helpknowledge diffusion and aid multinational firms’ activities (Kerr 2008, Foley and Kerr 2011, Saxenian 2006) London – migrant-run firms make >ave international sales; ethnic-headed more locally-orientated (Nathan and Lee 2011) Importance of specific diaspora structure; potential limits on ‘breaking out’(Kitching et al 2009) 10

  11. Consumption Net migration may raise demand for non-tradable goods. It may also shape the product / service mix=>hybridisation (Jacobs 1969, Gordon et al 2007) Conversely, migration may increase competition for goods with inelastic supply, e.g. housing (Saiz 2003, Ottaviano and Peri 2006) Some quant, case study evidence that migration expands local product mix (Mazzolari and Neumark 2012, Monder and Ram 2003) London studies – minority ethnic enterprises typically established in sectors with low entry barriers, e.g. restaurants and catering, retail (Sepulveda et al 2011) 11

  12. Emerging messages Economic impacts of migration go well beyond the labour market – production, consumption-side channels Diversity and co-ethnic communities, not just migrants In theory – ambiguous economic impacts Actual evidence – largely small, net positive effects But there are big evidence gaps, especially in London Labour market policy – importance of re-regulation … More broadly – policy focal points include high-skilled migrants, diasporic links, business support 12

  13. Thanks. m.a.nathan@lse.ac.uk personal.lse.ac.uk/nathanm squareglasses.wordpress.com @iammaxnathan

  14. 14

More Related