The Lords’ report on the economic impact of immigration is better than I’d feared. But I’ve still got two problems with it.
One is this:

We found no systematic empirical evidence to suggest that net immigration creates significant dynamic benefits for the resident population in the UK. This does not necessarily mean that such effects do not exist but that there is currently no systematic evidence for them. (par 69)

But absence of proof is not proof of absence.

It’s always hard to find evidence about long-run economic effects, especially if the long-run hasn’t happened yet.  And there are four ways in which immigration can benefit us in the long-run, in theory:
1. As the Lords say (par 56), it increases profits. And in the long-run, profits get spent on jobs and capital equipment. That should increase the wages of indigenous workers.

2. Immigration helps reduce (pdf) inflation. That should reduce real interest rates, which again encourages capital formation and hence boosts indigenous wages.

3. There might be benefits to indigenous wages as workers learn from skilled migrants, or as diversity helps improve creativity and international networks.

4. “Immigration keeps labour costs lower than they would be without immigrants. These lower labour costs also benefit consumers, who then pay less than they otherwise would for products and services.” (par 113) But surely, if consumers face lower prices, they’ll spend more on goods and services generally, to the benefit of indigenous workers. Have you never heard of the Pigou effect?

Now, the committee is right to say these effects haven’t been quantified. But, equally, it gives us no reason at all to believe they are all zero.  So, surely, there must be a presumption in favour of some long-run benefits.

My second concern is this:

The available evidence suggests that immigration has had a small negative impact on the lowest-paid workers in the UK (par 78).

But what would happen if the immigrants stayed at home in low-wage countries instead?

Take Wiki from Corrie. If she hadn’t come to Underworld to sew knickers, she’d probably be sewing them at home instead. Her labour supply would therefore depress wages in Poland. That in turn would reduce the prices of Polish-made knickers. Which in turn would cause British consumers, at the margin, to buy Polish knickers rather than ones from Underworld. Janice and Kelly would therefore lose jobs and wages anyway. They’d be no better off if immigration were limited.

Even if the immigrants didn’t come here, then, they could still worsen the lot of low-wage British workers – that’s factor price equalization. The Lords do not consider this possibility.
So, maybe the Daily Mash is right yet again, and the Lords are erring on the side of hostility to immigrants.

However, even if I’m wrong and they’re right, the case against immigration is not made. Not at all. As Tim and Allan both say, if immigration is good for immigrants and no harm to the rest of us, then it should surely be permitted on utilitarian grounds, let alone liberal ones.

About the author
Chris Dillow is a regular contributor and former City economist, now an economics writer. He is also the author of The End of Politics: New Labour and the Folly of Managerialism. Also at: Stumbling and Mumbling
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