Wednesday, 23 August 2017

Immigration targets

Infometrics has a new report out on immigration, suggesting that numbers should be cut to between 10,500 and 16,600 per year. I caught a phone call this morning from someone asking where they'd pulled that number from, so I had a look.

It's a bit odd.

Chapter 4 summarises the literature that's out there on effects of migration: hard to blame immigrants for house prices except perhaps in short-to-medium term; migrant networks mean that Auckland has a self-reinforcing draw; low-skilled migrants have worse outcomes than low-skilled Kiwis but better outcomes than they'd have had at home; higher net migration has no significant negative effects on employment or wages for native-born Kiwis but might reduce wages for recent migrants; and, there's little evidence that immigration has boosted productivity.

No particular disagreement with anything in there. But why then jump to wanting to cut immigration to a quarter of current levels? They argue that doing so would maintain New Zealand's population growth relative to world population growth - basically, setting as target New Zealand's fraction of world population. I have no clue why they chose that as a goal. Like, maybe they could have chosen New Zealand's fraction of the body weight of humans in the world, and then we could have more people if they were thin?

They wind up advocating countercyclical immigration policy that would restrict immigrant numbers when net migration from Kiwis (returning home, not leaving) is high, but that would also mean we only allow in migrants when New Zealand's economy is performing poorly; the mix of migrants we might then attract would not be as good as the mix we get during economic booms.

And while they noted the evidence that migration has no particular link to the wages of native-born Kiwis, they suggest that restricting immigration during booms would push up wages and force investment in labour-saving capital, which could boost productivity. But the general jist of the international evidence is that migrants, overall, don't really do anything to the wages of native-born workers - and there's more evidence for small positive effects than there is for any kind of negative effect. Restricting migration of low-skilled workers could goose the productivity stats in the same way as a $25/hr minimum wage: chop a pile of the least productive workers out of the system and increase measured average productivity, while doing nothing to help the productivity of anybody who's still working.

So I guess that they've shown that if your goal is to maintain New Zealand's fraction of the world's population, you'd need to cut immigration to do that. I agree with them on that. I don't know why that should be the goal though.

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