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Tying immigration to productivity loss? I thought immigration leads to an increase in productivity (but also wage stagnation). Why did other EU countries not s

by jotm 7y ago

Tying immigration to productivity loss? I thought immigration leads to an increase in productivity (but also wage stagnation). Why did other EU countries not suffer the same around 2004? Germany's looks like it skyrocketed. Same with Switzerland's. France, Benelux and Spain show an increase in productivity. Italy, which chose to not apply any restrictions in 2007 (RO/BG ascension) shows a massive increase post 2007. Norway, which is not a popular destination, has a weird curve. The United States has around the same percentage of immigrants per year as the UK - ~0.3% of the total population. Canada's is double that (and rising) at 0.65%. Explain their continued growth in spite of immigration? Or maybe it's due to it? Mexico's productivity is dropping, fwiw.

thu2111 7y ago
Economists define productivity as "output per hour worked" more or less. Thus adding people doesn't increase productivity because the total output goes up but so do hours worked. There's really only one sustainable path to increased productivity: technology. There are limits to how long people can or will work, so you have to get more out of them per hour. That means making them more efficient, which normally means better tools. It can also of course mean a society-wide reduction in wasteful non-work but that's harder to pull off. The UK has seen massive levels of intra-EU immigration compared to other countries. It was one of only two countries that didn't impose transitional controls for years in 2004. The EU likes to talk about freedom of movement but actually almost every country except the UK chose to restrict it. If you look into it you'll see that for many years after 2004 most countries still restricted freedom of movement from the 2004 entry countries. If you look at Germany then the end of their transitional controls is in 2011, in the middle of the huge productivity drop associated with the GFC. But after that recession ends and productivity returns to normal, productivity growth has completely ended. That aligns with the UK experience. Most other countries were not hit with the same sort of sudden influx, due both to language issues (English is by far the most learned language) and due to their transitional controls. Italy's data looks pretty odd to me. It's flat except for a large step change at the time of the GFC? USA figures aren't comparable. USA only allows legal skilled immigration. For unskilled labor of the sort that can be automated, yielding productivity increases, it's mostly illegal immigration so won't show up in stats so easily.

by jotm 7y ago

thu2111 7y ago

Economists define productivity as "output per hour worked" more or less. Thus adding people doesn't increase productivity because the total output goes up but so do hours worked. There's really only one sustainable path to increased productivity: technology. There are limits to how long people can or will work, so you have to get more out of them per hour. That means making them more efficient, which normally means better tools. It can also of course mean a society-wide reduction in wasteful non-work but that's harder to pull off. The UK has seen massive levels of intra-EU immigration compared to other countries. It was one of only two countries that didn't impose transitional controls for years in 2004. The EU likes to talk about freedom of movement but actually almost every country except the UK chose to restrict it. If you look into it you'll see that for many years after 2004 most countries still restricted freedom of movement from the 2004 entry countries. If you look at Germany then the end of their transitional controls is in 2011, in the middle of the huge productivity drop associated with the GFC. But after that recession ends and productivity returns to normal, productivity growth has completely ended. That aligns with the UK experience. Most other countries were not hit with the same sort of sudden influx, due both to language issues (English is by far the most learned language) and due to their transitional controls. Italy's data looks pretty odd to me. It's flat except for a large step change at the time of the GFC? USA figures aren't comparable. USA only allows legal skilled immigration. For unskilled labor of the sort that can be automated, yielding productivity increases, it's mostly illegal immigration so won't show up in stats so easily.