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Economic benefits of large-scale immigration outweighed by strains of population growth

  • Rejuvenating the UK’s ageing population through immigration will be an endless treadmill requiring never-ending stream of newcomers
  • The potential economic gains from population growth are modest compared with the resulting pressure on infrastructure and the environment
  • Selective immigration policies risk denuding poorer countries of professionals – controls should promote welfare of those nations too

Large-scale immigration will ultimately have a negative effect on standards of living as any economic benefits will be outweighed by the pressures imposed by a much larger population, a study published today by the cross-party think tank Civitas shows.

In a new analysis of the economic and demographic consequences of current levels of immigration, distinguished Cambridge economist Robert Rowthorn argues that any gains would be small compared with the strains placed on amenities such as housing, land, schools, hospitals, water supply and transport systems.

While GDP as a whole will grow, he says, GDP per capita – a much better indicator of the nation’s wealth – will be only marginally affected by the enormous population growth forecast for the coming century.

“Unrestrained population growth would eventually have a negative impact on the standard of living through its environmental effects such as overcrowding, congestion and loss of amenity,” he writes.

“Such losses would ultimately outweigh the small gain in average wages apparently resulting from mass immigration.”

Other findings in the report include that:

  • It will be virtually impossible for David Cameron to hit his “tens of thousands” net migration target if EU migration continues at the present rate;
  • While migration from Polish workers is likely to fall in the near future, that from Bulgaria and Romania is unlikely to fall any time soon;
  • Recent EEA migrants have either paid their way or generated a modest surplus, but the fiscal benefits are not as great as some have claimed;
  • Unskilled workers have suffered some reduction in their wages due to competition from immigrants.

The Office for National Statistics’ high migration scenario suggests growth in the UK population of 20 million over the next 50 years and 29 million over the next 75 years – entirely from migration. This is equivalent to adding a city almost the size of Birmingham to the UK population every two-and-a-half years for the next 75 years.

Rowthorn, Emeritus Professor of Economics at the University of Cambridge, says the potential economic benefits of immigration stem mainly from its impact on the national age structure, by helping to rejuvenate an ageing UK population and increasing the share of the population of working age.

But he warns: “If many of the immigrants fail to get jobs, or if they end up in low skill jobs or displace native workers, large-scale immigration will have a negative impact on GDP per capita and on government finances. Thus, the impact could be positive or negative but either way it is unlikely to be very large.

“The only thing that is certain is that immigration on the present scale, if it continues, will lead to much faster population growth and a much larger total GDP than would otherwise be the case, with consequent pressure on infrastructure and the environment.”

Rowthorn says immigration has only a modest effect on the “dependency ratio” but a large impact on population growth, which will exert pressure on infrastructure and the environment. The benefits are also front-loaded and require a “never ending stream of immigrants”.

“Higher rates of net immigration reduce the dependency ratio during the initial decades, but from then onwards the gaps between the projections remain fairly constant.

“This is because the young immigrants who enter the UK during the initial years eventually reach old age and new immigrants are then required simply to preserve the age structure.

“Once the inflow stops, the age structure will revert to its original trajectory.”

Rowthorn also warns that the UK’s increasingly selective non-EU immigration policy risks “denuding” poorer countries of the professionals on which they depend.

He says immigration controls should be designed to promote the welfare and economic development of the countries from which immigrants tend to come.

“Migration policy towards these countries should be seen as a complement to the official aid policy and not as a means of enriching ourselves at their expense,” he writes.

A good way to help poor countries would be to greatly extend the bursaries programme for students from poor countries, Rowthorn argues.

“In most cases the award of such bursaries should be conditional on students leaving the UK on completion of their studies. The policing of this aspect of the policy could be left to the host university or other educational institution.

“The fact that students were expected to leave the UK at the end of their studies would not in itself guarantee that they would actually go home. They might well go to another rich country such as the USA. However, the scheme could be accompanied by financial and other inducements to make a return home attractive.”

Notes

The full report, ‘Large-scale Immigration: Its economic and demographic consequences for the UK’, can be downloaded below.

Robert Rowthorn is Emeritus Professor of Economics at the University of Cambridge and a Fellow of King’s College. He is the author of several books including De-industrialisation and Foreign Trade (with John Wells), and academic articles on economic growth, structural change, employment and migration.

He has been a consultant to the International Monetary Fund, the UN Commission on Trade and Development and the International Labour organisation, as well as to British government departments and a variety of private sector firms and organisations.

For further information contact:

Daniel Bentley
Director of Communications
T: 0207 799 6677
E: daniel.bentley@civitas.org.uk

Civitas: Institute for the Study of Civil Society is an independent, cross-party think tank that facilitates informed public debate on important issues of the day. It is not affiliated to any political party and receives no state funding


Large-scale Immigration: Its economic and demographic consequences for the UK

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