Since 2003, immigration has been one of the top three issues in every one of Mori's monthly surveys of public opinion. The government has changed immigration policy four times since 2001. Now, with the economy in trouble, some people are worried that immigration is effectively coming to an end, as recent arrivals from eastern Europe head back home. Others still feel that Britain has too many immigrants. Last month MPs Frank Field and Nicholas Soames called for an overall "migration cap"—an idea rejected in this month's Prospect by then home office minister Liam Byrne.
But debates tend to focus on the short term—about the numbers coming in and out of the country. There is a larger, long-term trend: many migrants settle, and migration is helping create bigger, more diverse societies. There are two main effects of this. First, diversity and population growth help drive each other. Migrants are helping grow the British population, and those who stay are helping to raise the birth rate. Population growth is now at its fastest for 30 years; the most recent figures suggest that Britain now has about 61m people.
Second, this diversity is heavily urbanised. Most migrants and ethnic minority communities are in cities, especially big ones. London accounted for over half of net immigration in 2002-03; other big cities took 69 per cent of the rest. And in some urban areas—particularly London—over half of all births were to non-British born mothers. Similarly, our existing ethnic minority communities are largely found in and around the cities.
So what are the implications of this? What should we expect from bigger, more culturally diverse communities? A new paper from IPPR suggests we may be underestimating the economic benefits of migration and diversity, especially at a local level. Drawing on both British and international studies, we found three main ways in which "people mix" can benefit local economies.
In the short term, we see "skills effects"—improvements in human capital and labour market performance. Most obviously, migrants seem to be good at filling employers' workforce gaps. There is little or no evidence of long-term economic costs from labour market change, although there are sometimes short-term wage pressures.
Over time, local economies may gain from "diversity effects," as the workforce becomes more mixed, and consumers demand a wider range of goods and services. A number of workplace studies suggest that over time, diverse teams outperform homogeneous ones, especially where teamwork or "knowledge-intensive" activity is required. In Silicon Valley, for example, around 25 per cent of all startups have at least one foreign-born owner. More broadly, there are new cuisines, music and fashions emerging from areas around Britain—Polish food shops, for example.
If migrant and minority communities are large enough, in the long term these changes can feed into "size effects"—as diversity helps grow the performance of the local economy. There is striking evidence from the US that in big cities, diversity interacts with density, influencing city size and labour productivity. (Although as cities grow, housing costs can rise as well.)
The evidence implies diversity is good for us economically. But it also sets up a dilemma, which Byrne acknowledges. A number of US studies suggest that higher diversity has social costs – specifically, falling trust and lower spending on public services, as a sense of shared priorities erodes and communities worry that their taxes disproportionately benefit new arrivals. Robert Putnam explains this as existing communities "hunkering down" as new arrivals appear, so that social capital is lower in more diverse areas.
Over here, David Goodhart ( Prospect, February 2004) has suggested that Britain may be heading for a similar trade-off between diversity and the social contract. He proposes that assimilation should be encouraged, and total migrant numbers may need to be restricted. Soames and Field argue that Britain should send back skilled migrants after four years, explicitly tying this to worries over national identity and pressure on schools and hospitals. A future Conservative administration might well put some of these ideas into practice. Last year David Cameron floated similar restrictions on non-EU residents, calling for both caps and "substantially lower'" immigration overall.
How should we respond to this? First, we need to check whether the dilemma is real. Most evidence on the social costs of diversity comes from the US. But America has a very different population profile from Britain, with much bigger economic, racial and spatial divisions. Research by Danny Dorling finds that American-style "ethnic ghettos" don't exist here; and overall, there is growing tolerance of difference. Hard evidence on public service pressures is not there yet. So far, the case that diversity costs is not convincing.
Second, how might any trade-off play out? Again, the US example is instructive. America is—still—an economic powerhouse, and diversity has played an important role in this. As economist David Card points out, any social costs to diversity seem to be greatly outweighed by the benefits. Interestingly, Robert Putnam shares this view—arguing that overall, policymakers should capitalise on people mix, not try to hold it back.
Finally, what are the practical steps we might take to maximise economic gains from diversity? Liam Byrne points to the government's "earned citizenship" approach to migration, and the new points-based system for controlling entry. This is good stuff, but only part of the answer. Here are some more things that might help: encourage bigger, denser cities; deploy universities as "migrant magnets" to help attract the high-skill workers we need; support migrant entrepreneurs, and make better use of active labour market measures to help deal with short term costs. All of this should help us look beyond people flows—to focus on managing the more mixed-up country we are becoming.
"Your Place or Mine: The local economics of migration" is availablehere
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