My column today is about the apparent contradiction between economists saying for years that immigration doesn't hold down wages, and now saying that deporting them will push up wages and inflation www.ft.com/content/2bb6... - ThreadSky

sarahoconnorft.ft.com • 86 days ago

My column today is about the apparent contradiction between economists saying for years that immigration doesn't hold down wages, and now saying that deporting them will push up wages and inflation https://www.ft.com/content/2bb60c40-efe1-48d1-9c9e-b9ff672ce349

Comments

mortimerleepaul.bsky.social•63 days ago

Great column! Immigration, like most change, creates winners and losers. The economy as a whole may gain and those people whose labor is complementary to immigrant labor gain along with owners of capital

But labor that competes with immigrant labor loses

Any other analysis is just bunk

mondpanther.bsky.social•85 days ago

If foreign labor is complementary to domestic one increasing immigration will increase both wages and lower costs and thus prices. Limiting or reducing immigration will have the opposite effect. We have a forthcoming paper that shows that this is relevant for the UK.

grkstav.bsky.social•85 days ago

The people who will suffer the brunt of the substitution effects are, surely, the ones who will enjoy most of the complementarity effects. Right?

audouin1b.bsky.social•85 days ago

The point here is that often the immigrants are doing jobs that are spurned by locals. These jobs are essential to the smooth working of society, so there is a dramatic effect if the immigrant workforce leaves. Wages are not held down by immigrants in work, but will spiral if that workforce departs.

hooky-gear.bsky.social•85 days ago

The FT has turned into clickbait. Contradiction or not a contradiction? The journo needs to get her story straight.

oralston.bsky.social•85 days ago

Listening to recent Odd Lots podcast, Nouriel Roubini said that the US’s unbridled immigration under Biden was one of the (demand-side) factors of strong US growth. One I hadn’t heard explicitly called out before.

haskell.bsky.social•85 days ago

I'm sorry to have to say this, but they aren't paying any attention at all to what economists are saying

leetaylorbythesea.bsky.social•85 days ago

I am not anti migrant, voted to remain etc. But one of the key reasons Blair allowed early FoM from ascension countries was to keep inflation down. Hire and fire in the low wage economy is more common, high staff turnover rates and not always legally compliant employers.

danielphilips.bsky.social•85 days ago

Depends what kind of inflation. Good or wages.

leetaylorbythesea.bsky.social•85 days ago

It was wages inflation they were concerned about

martinavatar.bsky.social•85 days ago

"But one of the key reasons Blair allowed early FoM from ascension countries was to keep inflation down"

Not what I heard.

I heard that HM Treasury lobbied hard to allow early FoM 'cos they saw the end result of increased economic activity through a workforce enlarged by net contributors.

leetaylorbythesea.bsky.social•85 days ago

I worked in the food industry, both as a chef and in a production unit. It was much easier to hire staff for jobs like kitchen porters, assistants, etc. after 2005

healthquality.bsky.social•85 days ago

Great read! Reminded me of a great paper from C. Olaya: in milk production models, cows aren't always considered—higher milk prices don't make milk producing cows to appear! There's a delay in the system. Similar dynamics apply to immigration...

https://proceedings.systemdynamics.org/2012/proceed/papers/P1375.pdf

imesoamericano.bsky.social•85 days ago

Thank you for highlighting the cognitive dissonance of economic “experts” and the daily lives of real families drudgery to survive.

efnbsbun.bsky.social•85 days ago

hermgamma.bsky.social•85 days ago

The Tories talked very tough on immigration but used that as a cover to increase it fourfold compared to pre-Brexit levels. That may be Trumps strategy as well. It may hurt wages if immigration creates an unregulated labour pool at low pay, such as illegal immigrants or people hired on …

hermgamma.bsky.social•85 days ago

.. non-standard contracts. So there is a chance that Trump will talk tough, take only token, noisy and symbolic action and widen and stratify further an already severely disadvantaged part of the population. His backers are unlikely to want him to do anything that will lower the GINI coefficient.

sarahoconnorft.ft.com•86 days ago

In truth, I don't think it is a contradiction, but the way economists have talked about immigration to the public over the years (as filtered through the media) hasn't conveyed this properly

yhkpenguin.bsky.social•85 days ago

Absolutely not contradictory because migrant or immigrant workers are willing to take lower wages whereas domestic-born workers would not take those same jobs at those low wages, hence mass deportations would be inflationary.

upandaway.bsky.social•85 days ago

Which illustrates that an additional factor in these cases is that working conditions in such industries tend to take a turn for the worse. Native-born people don't want these jobs because they expect work/life balance, while migrant workers usually just want to work and send money back home.

sinurata.bsky.social•85 days ago

Yes, and they only want to do the work for a short period of time.

sarahoconnorft.ft.com•85 days ago

yep

xlaszlo.bsky.social•85 days ago

Well, their motivation is secondary.

But immigrant workforce is definitely more mobile.

"Working conditions" btw is just part of labour cost.

You either spend more on making the place nicer or pay more money.

duncanrobinson.bsky.social•86 days ago

Great column. Really good to have you back in the discourse

sarahoconnorft.ft.com•85 days ago

Thanks Duncan! It's nice to be back

paulriz504.bsky.social•85 days ago

For those curious this is your 2024 election right here and those wild Latino shifts we saw for Trump.

Hispanics who are here are worried about new ones crushing their wages and under bidding them on contracts.

grkstav.bsky.social•85 days ago

Probably because they remember well how they themselves got the jobs or business opportunities in all likelihood: they were willing to offer "better terms" to the "buyers", not giving a ff as to the effect of doing so on other "sellers". Almost as if "prudent predation" can be a rational strategy.

tallgeekychap.bsky.social•86 days ago

There doesn't seem to be a contradiction there. What is being described is the consequences of lag time. Even if you could find domestic people to fill every role, the time it would take would create a short term supply crunch.

That crunch is why you'd have to offer incentives like higher wages.

tallgeekychap.bsky.social•86 days ago

The same would apply if you suddenly got rid of a lot of domestic workers in the same industry or sector, so it has nothing to do with nationality or migration.

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