Thursday, 21 August 2014

A big rise in immigration - excellent

Stats came out today with the latest immigration numbers for the year ended July, and they showed that the country gained 41,044 people over the past year, a near record level (the record is the net inflow of 42,500 in the year to May 2003).

Like a lot of these numbers, the net result is the difference between two surprisingly high numbers: total arrivals were 102,396 and total departures were 61,352. As I said the other day, behind 'net result' numbers there is often a very large degree of churn, with large inflows and flows that are sometimes many, many times larger than the net outcome. So it's not the case that 41,044 people upped sticks and came here: rather, 163,748 people were coming and going between New Zealand and the rest of the world, and rather more of them arrived than left.

The reason the net figure has risen to a near record, by the way, is that both arrivals picked up and departures eased off, so our net gain rose from the 10,600 of the July '13 year.

No doubt the xenophobes and other crazies won't be happy, but I think this is excellent news.

Personally, I like the non-economic social benefits that immigration tends to bring, but even if you put those to one side, the economics of immigration says, we win. The latest economic research on the impact of immigration shows that it tends to be good for the receiving country. You can read all about it in this post on Paul Walker's excellent Anti-Dismal blog or you can read the authors' own summary here, at the always interesting Vox site. In sum, "In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels".

And even if you think, well that's just one research paper, the reality is that a large majority of economists look on immigration as benefiting the host country. Here are the answers to a survey question that the Centre for Macroeconomics sent out earlier this month to a panel of UK economists (you can read the full thing here).

As the authors summarise it, "there is overwhelming support for the view that migration will increase the average income of current UK inhabitants".  There was also overwhelming support, by the way, for the idea that the UK was making a complete hash of its immigration policy and processes, but that's another story.

There's enough lunacy in the pre-election air already without some immigration myths adding to it, so if you hear some politico ranting and raving, take a deep breath and repeat slowly to yourself: no, immigrants don't take jobs from nationals. And no, they don't drive down local rates of pay.


  1. Only 40, must be practically euphoric at the current immigration rate. Perhaps you've got a portfolio of Auckland rental properties and never need to do battle on the Southern Motorway. Jokes aside, have you had any reason to revise your view over the last two years? Is there any data you can point to as a counterweight to Michael Reddell's analysis?

  2. Hi - thanks for the comment. I'm on holiday in Melbourne at the mo for the long weekend so no great time for a full reply (I'll do something more considered later on) but here are some initial ideas. And no, I haven't revised my thoughts, other than perhaps to acknowledge that (as the Brexit vote showed) there are people who are against immigration (or large scale immigration) for logical respectable reasons. Though the Brexit vote also showed us that there are plenty of the ranters and ravers around, too.

    First I'd just say that the onus isn't on me to prove anything. I already cited reputable cross-country research that showed immigration is a good thing, and pointed to the economists' consensus on the matter. The onus is on anti-immigration folk to explain why New Zealand would be the exception to the international rule and why everyone else is wrong.

    Second, as you note, I wrote two years ago. Since then net immigration has increased substantially. But as I reproduced here it is clear that businesses' difficulty in finding staff (skilled AND unskilled) has got even worse over that period, not better. So it can't be the case that immigration has made the labour market worse for locals, which tends to be one of the bigger gripes. There are other criteria that people might be using, but for me harm in the labour market simply can't be one of them. Quite the opposite - the current cycle would have hit a cyclical capacity constraint without the net immigration we've had.

    Third, I'm typing this in Melbourne, a good example of a cultural melting pot over the past century (Brits, Chinese, Greek, Italian...). I doubt if it would be half the place it is without that mix.

    In any event I'll come back to it when I've got a bit more time. Thanks again for the comment.

  3. Enjoy Melbs, great place, I used to live there, but I'm not sure it's any better for the addition of more than a million people in the last 10 years, it's been a hugely diverse place for decades. If it wasn't for the pretty good public transport network I'd hate to think what all that urban sprawl on the city fringe would have done...the roads still get pretty snarled up as it is.

    With regards to businesses' difficultly finding skilled staff, why don't they increase wages? Why would the government want to protect business from market forces? Also, surely the quickest way to get inflation back in the RBNZ's target is to engender some wage growth. Btw I was interested to note that according to SNZ's Labour Market Survey virtually none of the respondents cited "attracting staff" as a reason for wage rises.