What is policy towards migrant workers designed to achieve?

My name is Madeleine Sumption and I'm the director

of the Migration Observatory at the University of Oxford.

And this course looks at the role of immigration policies in the

labour market and particularly the role

of migration in addressing labour shortages.

Now, before we get into that,

it's worth just thinking a little bit about why people move internationally.

There are lots of different reasons that people might move.

Um, many people move for family reasons,

so maybe they marry someone in another country and they want

to live together in the country that one of them is from

other people move as refugees.

So they are forced to leave their country of origin because of a conflict,

and they need to find somewhere safe to live.

We also have many people moving as international students,

typically for a temporary period,

and then some people are moving explicitly for work.

Now, at any one point in time,

um, most migrants in in the labour market.

When I say migrants,

I'm talking about people who have moved internationally to live somewhere new.

Most migrants in the labour market or in the population,

um, will not necessarily have moved explicitly for work.

Actually, in most high income countries, like the UK,

um, a majority of people will have moved, uh, for other reasons. Like like family.

Um, that said, from a policy perspective,

the main lever that governments have to try and shape the impacts of immigration

on the economy is work related migration.

Because that's the piece of of immigration policy

that is most focused on the economics of,

You know what people are doing in in the labour market.

And so this course is going to focus specifically on work related migration

and people who are given permission to come to a country for work.

Now,

what does work migration look like?

There are basically a couple of of different ways of doing, uh,

work related migration, sometimes also known as labour migration.

Uh, one. The first option is known as employer driven or demand driven migration,

and what happens there is typically you might have an

employer who has a vacancy that they want to fill.

They run a recruitment process, lots of candidates come forward,

and the person that they want to hire,

is from another country and doesn't have permission to

work in in the country where they're located.

So in that case, the employer might go to the government, or in some cases,

the worker might apply to the government, saying,

I have this job. I need this person to fill it.

Um, and I would like a work permit and then the government,

assuming that they're eligible, uh, the government will, um, will give them a work,

a work permit that allows them to live and work in the country.

So that's employer driven or or demand driven migration.

On the other hand, we have, uh,

what's sometimes known as worker driven or supply driven migration.

And what happens there is, um the worker makes the decision to move,

and they have permission to be in the country,

um, on on a work visa.

But it doesn't link them to a particular job,

so they can then choose to do any job that they like.

And common examples of this are, um,

points based systems in countries like Australia and Canada, which, um,

select people based on characteristics like their education.

And then they they come to the country and they look for a job

and there are also other schemes like working holiday schemes,

which allow young people,

typically under the age of 30 to move for maybe 1 to 3

years again to take up any job in the country that they're moving to

and actually, free movement within the European Union

also functions as a kind of supply driven or worker driven

migration in the sense that people can do any job.

Um, and the decision to move, um,

is primarily taken by by the migrants or by the the worker themselves.

Now,

governments designing work related immigration policies

have to make quite a few different

decisions about who they're going to allow to come to the country.

Uh, what criteria they have to meet, Um, how long they can they can come for?

And when they're doing this, they generally have, um,

various different objectives in mind.

Um, so they might be thinking, for example, which workers should we admit,

who will contribute most to productivity?

And that will often be people with high levels of of skills?

Um, who, where research shows that they can have, uh, you know,

benefits for boosting productivity in the in the host country.

And that might be, for example,

because they're a a scientist or they're someone with, um, you know,

scarce skills that aren't aren't widely available in the economy.

Another objective that we sometimes see is benefits for public finances.

So if people pay a lot in income tax and other taxes and it doesn't cost

a lot to provide them with public services

like health care or education for their Children,

then they would be They would generally be

classified as a net contributor to public finances,

and that can have benefits for the rest of the country

because it means there's more money to spend on public priorities.

Another objective of immigration policies is sometimes to

support specific industries that policymakers think are important.

So a common example is agriculture,

which in many high income countries is very reliant on overseas workers.

And it would be difficult,

particularly when we're looking at seasonal work for employers

to find enough people to do the work.

And so policymakers sometimes decide to support specific industries

by providing options for them to hire workers from overseas.

Now, of course, the objectives of immigration policy are not always economic.

There are political objectives, too.

Um governments often, for example,

want to show that they are in control

of of immigration and that they're managing it in

an effective or in a fair way.

Um, and there may also be social objectives, things like, for example,

preventing the exploitation of workers who come from from overseas.

Now one of the questions that um comes up most often

when policy makers are thinking about how to design immigration policies

is what does our country actually need? What is necessary in our labour market?

And this sounds like it should be a reasonably straightforward question.

Intuitively, people feel this is something that there should be

a clear answer to that. Economists should be able to just sit down and and tell them,

and in particular there's a lot of interest

in this idea of where there are shortages,

that it might be useful to to fill by bringing in workers from from overseas.

So that's what I'm gonna mostly focus on in in this course.

Now.

The idea of a labour shortage has different definitions,

but usually it's something along the lines

of there being an insufficient number of workers

to meet employers.

Demands for um for labour or employers demand to fill

vacancies So if we see if there's a labour shortage,

we might see employers struggling to recruit people

with the specific skills that their vacancy requires.

In theory,

there could be some benefits of using migration to help address labour shortages.

And that's because if a specific group of workers are scarce in the labour market,

so if there aren't very many of them,

then people coming in with those skills or doing that particular kind of work

are more likely to be complementary to local workers in the labour market.

And this is expected

to do things like increase productivity, um, and, uh, and potentially wages.

Um, now, it's not just about economics again.

Politically, the idea of filling labour shortages

is also quite quite appealing. And that's because people like the idea

of, um, meeting a an objective need in the labour market,

especially if they feel that the process of deciding where

those shortages are is rational and and evidence based.

Now, unfortunately,

and one of the major themes of this course is going to be that it's it's actually

a lot a lot more difficult to determine exactly

where labour shortages are than many people imagine.

Um it's surprisingly difficult for economists to identify exactly

who should be admitted or or for which jobs.

And so in the next modules,

I'm going to explain why this is and what the challenges are that

policymakers face when they're trying to use

migration policy to address labour shortages.