Immigration and the division of labour


In 2004, the UK lost about 360,000 workers/taxpayers but gained an additional 223.000, making immigration the most significant contributor to population growth in Great Britain. Emigrants have also become a crucial factor in maintaining the scale between workforce and a still ageing population. According to the “Foreign Worker Employment" report from February 2009 made by the Office for National Statistics, 21 % of the British Workforce has at least one foreign born parent.

The question then posed is whether it is a good or bad trend to have a still growing population of foreigners moving to the UK? In short, from an economic perspective it is undoubtedly good. Considering the fact that an growing number of Britons each year leave the country, it would be a catastrophe for the British economy to make migration rules more stringent than they already are. In fact, the wealth of all Britons would improve if current restrictions were diminished, making it easier for employers to hire the right workers with no regard of nationality EU or non EU.

Research published in the journal “International Tax and Public Finance" by Mihir A. Desai, Devesh Kapur and John McHale suggests that the quantity of foreign workers needed in the UK as a share of the British working age population will increase to about 73 percent within the next 40 years, this even assuming no post 1995 migration. Considering all this, easing the immigration procedures would be more than just useful, it is required.

Among the arguments against this include the suggestion that foreigners should contribute to their native economies rather than going to the UK. However, everything being equal the optimal use of human capital will by and large result in the optimal production of wealth. Foreigners going to the UK will be contributing to their community will also contribute to the aggregated wealth produced in the world. However, if any doubters still remain, why doesn't the government reward this percieved investment of human capital in the British economy with export restrictions to the UK market?