Friday, February 26, 2016
Mike Butler: Large-scale immigration not good
Harrison assessed the evidence cited by public law specialist Mai Chen in an online book titled “Superdiversity Stocktake: Impact on Business, Government and on New Zealand”, released last November. He also looked at official thinking on immigration.
Harrison’s paper, titled “The Superdiversity myth”, was released the day before Statistics New Zealand announced a new record net gain in migrants of 65,900 in the year to January.
Mai Chen, who is chair of the Superdiversity Centre, which analyses the law, policy and business implications of New Zealand’s superdiversity, said in “The Superdiversity stocktake” that:
1. Superdiversity is economically beneficial for New Zealand
2. ‘Investment’ is needed to maintain the ‘diversity dividend’
3. More diversity is inevitable and is to be welcomed
4. Superdiversity benefits need to be widely understood and better communicated.
However, Harrison said three of the 10 references presented in “Superdiversity Stocktake” to argue that superdiversity is positive provided evidence that showed negative outcomes. The other seven did not provide any convincing evidence.
“There aren’t that many academic articles that find a positive relationship between ethnic diversity and economic benefits, and we didn’t find any that provided a compelling argument for a general proposition that ethnic diversity has significant economic benefits,” Harrison said.
“The other strand in the literature, that ethnic diversity has a negative impact on economic performance is entirely omitted from Mai Chen’s discussion,” Harrison said.
Harrison said the Labour Department’s immigration research based on a paper titled “New Zealand Research on the Economic Impacts of immigration 2005–2010: Synthesis and Research Agenda”, did not provide any convincing evidence that large-scale immigration is good for New Zealand. He said:
1. The flagship research effort, the computable general equilibrium model, was incapable of addressing the key issues that large-scale immigration raises.
2. The assessment that average incomes increase is a based on a flawed methodology and there is no evidence of a positive outcome for New Zealand-born residents.
3. The positive fiscal effect was also based on a flawed methodology.
4. Continuing large-scale immigration will have a substantial negative impact on immigrants who have recently arrived.
The conventional way of looking at the economic impact of large-scale immigration shows:
1. Real wages will fall
2. Owners of land will benefit because land underpins the New Zealand economy and the supply of land is fixed.
3. There will be an outflow of "native" labour in search of higher wages in Australia
4. The economy will be bigger, but average incomes will fall
5. Resources will flow into low value service production.
The official analysis of the impact of immigration in New Zealand almost entirely omits discussion of the fixed factors of production (land) as a simplification that doesn’t matter very much, without thinking at all about how New Zealand could be different.
The model seems to be consistent with some of the observed facts, which are:
1. Real per capita export growth has slowed as labour supply has increased
2. Labour productivity growth has been very slow
3. Census data shows Auckland median income growth was the second lowest of any region over 2001-2006, and the lowest over 2006 to 2013.
Auckland is the “poster child” of superdiversity, Harrison said. If there was anything in the ‘diversity dividend’ argument Auckland should have been leaping ahead in the income stakes and it is not.
See “The Superdiversity myth - A review of the economic arguments for the ‘superdiversity dividend’” at http://www.tailrisk.co.nz/documents/TheSuperdiversityMyth.pdf
at 10:11 AM