Here's why cutting net migration to "tens of thousands" would make us much worse off
23 December 2013 7:36am
Of the economically destructive policies currently championed by the coalition government, a target to reduce the level of net migration to the UK from "hundreds of thousands to tens of thousands" certainly ranks as one of the worst.
The case for the free movement of people is not just a moral one, but economic. As with free trade, the mobility of workers allows them to pursue a wider range jobs, and to find one that would better use their talents.
New research from think tank the National Institute of Economic and Social Research (Niesr) suggets that such a target would reduce aggregate GDP by 11 per cent by 2060, and GDP per person by 2.7 per cent.
Limiting migration would also take a heavy toll on our public finances. Total government spending would increase by 1.4 percentage points of GDP by 2060, which would mean more borrowing, or tax hikes.
Offsetting that increase in government spending with income taxes would mean a required increase of 2.2 percentage points.
While there may be an initial increase in gross wages as migration policies reduce the supply of labour, that would be more than offset by the higher tax burden on households. Net wages would be 3.3 per cent lower by 2060 if net immigration did falls to "tens of thousands".
Those familiar with the economic research on migration won't be surprised.
In his 2011 paper "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?" Michael Clemens found that eliminating global barriers to free movement would increase world GDP by 67 to 147.3 per cent.
That's a huge gain compared to the mere single digit annual increases that even the fastest growing economies might be expected to a achieve.