Do you want more immigrants working in Britain, or more British jobs going to foreign call centres?
A new study suggests that companies employ immigrants in Britain as an alternative to sending jobs offshore
By James Kirkup
10:55AM BST 26 May 2015
[Comments] 396 Comments
A lot of people come to Britain from foreign countries. We call them immigrants, and a lot of people aren’t happy about how many of them there are.
Some of those unhappy people worry about the effect immigration has on employment in the UK. Some worry that the arrival of foreigners somehow costs British people jobs, because the immigrants take jobs that would otherwise be done by British people.
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That idea is rejected by most economists, many of whom talk about the “lump of labour fallacy”, the mistaken belief that there is a fixed and finite number of jobs in any economy; in fact, the arrival of cheaper/more productive workers can allow employers to hire more people. So more immigrants can mean more jobs, albeit additional jobs that are held, at least in part, by immigrants.
That’s the textbook stuff anyway. Real-world examples of how employers react to immigration are more complicated.
Here, a new paper from the National Bureau of Economic Research, a US think-tank, is interesting.
The paper, by Gianmarco Ottaviano, Giovanni Peri, and Greg Wright, looks at the impact of immigration on the imports, exports and productivity of service-producing firms in the U.K.
Broadly, it concludes that employing immigrants makes companies more productive: for every pound they spend, they produce more stuff. It also, possibly unsurprisingly, means they export more to the countries from which their immigrant workers originate, because they reduce communication and trade costs.
So far, so unexciting.
But the paper also concludes that “immigrants may substitute for imported intermediate inputs (offshore production)”. That means “the re-assignment of offshore productive tasks to immigrant workers… Immigrants also reduce the extent of country-specific offshoring…”
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In other words, companies that hire immigrants are using them to do work in Britain that would otherwise be done abroad.
I don't imagine a single economic paper will change many minds about immigration. (I've written here about how this debate is about more than economics.)
But I think it provides a useful new way to understand the immigration debate, and the choices involved.
To put it bluntly, when you call your bank, would you rather the phone was answered by an immigrant sitting in a British call centre, who pays tax to the UK Treasury on her wages and spending or by an Indian in an Indian call centre, who doesn’t?
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