Immigration leads to lower wages?

However the relationship between wage levels and immigration is more complex than this. Immigration contributes to economic growth. That increases the demand for labour in the economy which pushes up wage rates.

Effectively immigration reduces wages for what immigrants do but increases wages for supplying what immigrants need.

Hence immigration always produces winners and losers.

Reply 5

MagicNMedicine

20

As nulli tertius says immigrants have a supply impact (they work) and a demand impact (they consume and spend). Also they don't necessarily replace native workers one for one: immigrants are doing work that natives wouldn't otherwise done, either because they have brought a different skill set, or because they are doing jobs that natives didn't want to do.

You would expect to see a wage effect if migrants are coming over with the same skill set as native jobs competing for the same jobs, this will lower firms labour costs and so could allow them to increase production, or it might make them use more labour-intensive (rather than capital-intensive) production techniques so over time they hire more workers as workers are relatively cheaper. So over time if you did get a short-run fall in wages, as production expands that can mean employment increases too so more people get hired which is how the economy would absorb the increased labour supply.

But also on the supply side some types of labour compliment each other (eg high-skilled / low-skilled) so if you aren't able to produce something because of a shortage of high-skilled workers, and then they become available, you can start to produce in those areas, which will also mean low-skilled workers that work in those areas get hired as well. So it can have positive labour market effects for natives too.

You get some people saying by default "immigrants are driving down wages" but the UK has a minimum wage which also acts as a wage floor and stops wages adjusting downwards to what would otherwise be an equilibrium so this doesn't really hold. Ironically, a lot of the politicians that say immigrants are driving down wages are also the same ones that say we should scrap the minimum wage because it's costing jobs because wages can't fall enough.....you can't have it both ways.

There have been a lot of academic studies to see whether immigration to the UK has actually had a negative wage effect: the summary tables on pages 66 to 68 of this Migration Advisory Committee paper summarise them. In general there are no real wage effects in the UK from immigration, some papers find very small effects that change slightly with the income distribution (increase wages for higher paid natives, reduce for lower paid) but the effects are pretty small.

Reply 6

El Salvador

With more immigrants there are more workers in the labour market. With supply going up, wage drops.

But it's actually difficult to tell and you will need to look at several factors. Demand for more goods, for example, also goes up because of a higher population.

Then there's the extra production brings in by immigrants.

Reply 7

It's economics 101 .

If you have a surplus of goods prices come down. If you have a surplus of labour wages come down.

mass immigration us a vicious free market capitalist policy. The whole purpose of mass immigration is to flood the job market with cheap exploitable labour.

Reply 8

nulli tertius

Original post by imtelling

It's economics 101 .

If you have a surplus of goods prices come down. If you have a surplus of labour wages come down.

mass immigration us a vicious free market capitalist policy. The whole purpose of mass immigration is to flood the job market with cheap exploitable labour.

But the brighter folk then do economics 201 where they learn what MagicNMedicine has just explained.

Reply 9

The fundamental flaw in that argument is that immigrants are not coming over with different skill sets though.

btw, I should point out I support immigration if it is targeted. That is to say targeted at specific job shortages. Its just that mass immigration is a regressive policy which makes the people already here compete dog eat dog for jobs and resources so big business can make a quick profit.

(edited 10 years ago)

Reply 10

nulli tertius

Original post by imtelling

The fundamental flaw in that argument is that immigrants are not coming over with different skill sets though.

btw, I should point out I support immigration if it is targeted. That is to say targeted at specific job shortages. Its just that mass immigration is a regressive policy which makes the people already here compete fog eat dog for jobs and resources so big business can make a quick profit.

You try and recruit Brits to harvest crops by hand.

Reply 11

matt_brown67

OP

Thank you for all replies, very useful.

As I said in OP,I am aware that due to minimum wage, but some arguments I have read on the issue seemed to actually be claiming wages, even for low paid jobs, would drop from current levels.

I just wanted to confirm that my thinking was right, and that the minimum wage level would not be lowered.

I guess I should choose my sources better!

Thanks once again

Reply 12

Original post by nulli tertius

You try and recruit Brits to harvest crops by hand.

Try paying a decent wage then and it wouldn't be a problem.

Also, you do realise there is massive unemployment in the settled immigrant communities? Why aren't these people harvesting the crops?

(edited 10 years ago)

Reply 13

Original post by matt_brown67

Thank you for all replies, very useful.

As I said in OP,I am aware that due to minimum wage, but some arguments I have read on the issue seemed to actually be claiming wages, even for low paid jobs, would drop from current levels.

I just wanted to confirm that my thinking was right, and that the minimum wage level would not be lowered.

I guess I should choose my sources better!

Thanks once again

It doesn't lower minimum wage because minimum wage is an artificial construct created by government.

But, wages higher than minimum wage either stagnate or decline because of the saturation of the job market.

(edited 10 years ago)

Reply 14

akash11

9

Immigration in the long run saves jobs, it globalization that's killing this countries economy

Reply 15

Heliosphan

1

Original post by imtelling

Try paying a decent wage then and it wouldn't be a problem.

Also, you do realise there is massive unemployment in the settled immigrant communities? Why aren't these people harvesting the crops?

Because once an immigrant passes a residency test they become entitled to certain benefits and therefore less inclined to do some of the less desirable jobs.

Reply 16

Dylann

If immigration leads to a higher population (which it often does) it means the competitiveness for jobs increases. With an increase in job demand, employers can lower wages to cut costs. The employee cannot really argue against this, as there are 15 other (perfectly capable) people who could do the same job for a lower wage.

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Reply 17