Why is there a correlation between immigration and inequality?

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January 24, 2015 by Paul Goldsmith

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Professor Danny Dorling from Oxford University visited our school this week to talk about inequality. It was the very last thing he told us that interested me most, because much of what he said about inequality comes alive through the debate on immigration. Put simply, the most unequal countries are the ones with the most immigration, and the more equal countries are the ones with the least immigration.

The main reason why this is so is because, when inequality exists, it can only exist with a lot of low paid jobs. Professor Dorling rather crudely explained this as being because rich people need cleaners, gardeners and people to look after their children and those people are paid so little in this country that not many Britons want to do those jobs. This leaves many of them open for immigrants to come to the country and take them.

This explains the problem of immigration being a ‘good thing’ for a country as a whole but immigration also serving to force down wages as the supply of labour increases, which then goes to explain why there are so many benefits having to be paid to people working full time in the UK, and such a lack of tax revenue being received despite our economy creating two million more jobs, as many of those jobs don’t qualify for tax.

At the other end of the pay scale, great inequality also leads to immigration as people come to a Britain in search of the massive wages available in our finance, law and technology industries. This, you could argue, would be advantageous to us if they bring with them entrepreneurial skill to create jobs. But Professor Dorling pointed out that many of the jobs that these people come to do for high wages include such tasks as facilitating mergers and acquisitions, many of which result in lost jobs, particularly of those at the bottom of the pay scale.

Meanwhile, there’s Japan. A striking graph that Professor Dorling showed us was that showing the difference between the wages of the top 10% of earners in a country and the wages of those in the bottom 10% of the country. In the United Kingdom this is a multiple of 13.8. In Japan it is 4.5.

Take that in for a minute.

It means that in Japan, which no-one could accuse of not being entrepreneurial, which we all know is a country where innovation has thrived for many years, has a pay difference between those at the top of the pay scale and those at the bottom that is much smaller than the UK’s. Dorling explained how this led to less immigration.

In Japan, they still need cleaners, they still need gardeners, and they still need nannys (although a bit less of those as Japan doesn’t have as enlightened a view of feminism as we do). But here’s the important factor – the pay for those jobs is three times higher than in the UK. You can earn a LOT of money in Japan is you are in the top 10% of earners, but you can also earn a decent amount if you are in the bottom 10%, because pay for them is a lot higher.

Therefore, Japanese people will do those jobs, because they can achieve a decent standard of living doing so. Because Japanese people do those jobs, there are less jobs available, and immigrants are less likely to come to the country.

This is not to say that a developed country which has a more equal distribution of income will not have some immigration. They will, just not as much.

Which leaves me with an interesting thought. Much of UKIP’s policies, including the flat tax and other areas in which they want government to pull back from intervention, would make this country more unequal. Yet, they want to reduce immigration……….

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