Michael McMahon's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of Economics

Voting history

Devolving Income Tax Powers within the UK

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Confident
Comment:
I can see some potential benefits but my main concern is that there could be detrimental effects of income tax competition which affect the allocation of public services. Moreover, in the absence of devolved borrowing powers, there could be a large cost from counter-cyclical fluctuations in taxes as I am not confident that there would be enough discipline to build up sufficient resources in good times.

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Agree
Confidence level:
Confident
Comment:
Given the lack of monetary policy options at the moment, I do believe that efforts should be taken to attempt to both reduce the supply of saving, especially precautionary saving, and also boost the demand for investment. All possible policies should be considered and evaluated.

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Agree
Confidence level:
Confident
Comment:
If defined by a period of negative real interest rates and low growth, then I do believe that the major Western economies are likely to enter a period of secular stagnation. The part that I am uncertain about is the extent to which secular stagnation requires the cause to be weak demand and the extent to which what we are seeing now is purely a demand driven story. The current weakness of the economy likely gives rise to a negative output gap, but I doubt that output gap is that large - certainly much lower than the output gap implied by extrapolating pre-crisis trends. I think it is quite likely that not only has the level of potential GDP fallen, but so too has potential GDP growth. And that trend growth may remain subdued for the coming years.

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Agree
Confidence level:
Confident
Comment:
To the extent that most of the immigration benefits come from these groups, those policies seem like they aim to focus on the areas where most benefits would be reaped. Of course, even these types of migrants can impose congestion costs on the economy, especially where they are geographically concentrated in a few areas and when these areas are already under strain in terms of infrastructure and housing (such as London). It is difficult to isolate the effect of these migrants on house prices and other forms of congestion but government policies should also ensure that efforts are underway to address these costs at the same time.

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Agree
Confidence level:
Confident
Comment:
Immigration, especially higher skilled workers who make up over half of the migration inflow from abroad recently, brings benefits to the UK labour market that make it more attractive for firms to locate, remain or expand in the UK. This has benefits for activity and employment of those in the UK beyond the immigrants - the net migration numbers for work, as measured by work visas issued (+156,000 in the year to March 2014) are small relative to the total pool of employment in the UK (around 30m people). Of course, I am happy to acknowledge that my view may be considered biased because, like many others responding to this survey, I am part of the pool of UK-based immigrants (since 2000). Of course, as an EU citizen I have simply moved to another part of the union and so should be treated in the same was a Scot moving to London, or someone from Wales moving to Northern Ireland. However, often the political discussion of migration does not treat these cases equally as the public discussion often alludes to migration from the EU as the type of migration that is displacing low-skilled workers in the UK. Moreover, I see other benefits from immigration. Working in third level education I see large numbers of foreign students who come to the UK to study and these students benefit the sector both financially and also by bringing a valuable global perspective to the classroom.

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