Research proves benefits of skilled worker immigration

Immigration of skilled workers is 10 times more valuable to the economy than immigration of unskilled workers, new statistical research shows.

While unskilled immigrants produce many benefits for better-off residents in a country, they tend to reduce the wages the un-skilled native population can earn. They also tend to increase inequality and barely raise the return on capital.

Skilled immigrants, on the other hand, while directly lowering the wages of the skilled native population by a small amount, also raise the income that can be earned on capital. They are consequently worth roughly 10 times as much to the average household as an unskilled immigrant.

These were the conclusions of research by Michael Ben-Gad of the University of Haifa, Israel, based on a statistical model and a simulation of the effects of immigration into the US over a 10-year period. "This paper is not meant to be an anti-immigration manifesto," Mr Ben-Gad said. "The unskilled immigrants themselves are not to blame for the smaller contribution they make. They may work hard, but the skills they bring do not raise the return for native-owned capital by more than a trivial amount."

Part of Mr Ben-Gad's paper highlighted the tensions within a society over the sort of immigrants admitted. Highly skilled workers benefit from lower skilled immigration because it provides a pool of cheap labour for many time-consumer domestic chores, while low-skilled workers lose out because of the effect of competition lowering the price of their own efforts.

Immigration policies that encourage low-skilled labour are mostly of benefit to immigrants themselves, who are paid much more than in their native country, rather than the host country population. High-skilled employees would lose from a rise in immigration of similarly skilled foreigners, but this would be offset by the wider benefits these migrants bring to the economy, particularly boosting the return on capital owned by host country residents.

Mr Ben-Gad suggested in his paper that governments across advanced countries had rapidly tightened the rules on low-skilled immigration. The new legislation in the UK, for example, was introduced following the Queen's Speech in May, in part to address public concerns about the rise in immigrants and asylum seekers in recent years.

However, another paper presented at the Congress suggested host country workers in Europe generally did not perceive immigrants as a big threat to their labour market success, and were not concerned they would "steal" their jobs.

Less educated people were most hostile towards the impact of immigration on wages and employment but the greatest concern was over the effect on the public finances.