The latest research on the impact of migration

Migration is the big issue in the news, both politically and economically. New research by two economists from University College London finds that migrants added a net £20bn to the economy between 1995 and 2011, the UK receiving more in taxes than was paid out in welfare spending. The positive impact is greatest for those from the A15 EU nations [the initial EU members, such as German, Italy and Spain]. There are now more French bankers in London than in Paris.

The key findings are set out in this Sky News article, with some useful accompanying video clips.

Migration has several advantages. First, skills gaps can be filled, so that plumbers, teachers and nurses can be attracted from abroad by offering higher wages. The UK can also free ride on often expensive training, for example by encouraging foreign doctors to migrate rather than training more at our universities. This excellent interactive graphic from the BBC shows which countries need migrants and what their average salary might be- Australia, Ireland and Norway require dentists; Belgium, Canada and the UK want chefs…

Second, migrants tend to be younger [average age 26] and are more likely to have a university degree [64% are graduates]. The children of some migrants are also amongst the highest school achievers- for example, young people from Chinese and Indian backgrounds outperform those from other ethnic groups at GCSE and at A level. This may mean productivity is greater and so the SRAS and LRAS curves shift rightward over time, helping to boost growth and keep down inflation. Third, migrants tend to earn more than the national average and so pay a higher proportion of income tax and national insurance payments- their higher spending also boosts aggregate demand.

The argument that East Europeans are here to claim benefits doesn’t hold much water. The UCL research found this group have an employment rate of 81%, with only 64 000 EU migrants claiming benefits out of the 2.3 million resident in the UK. There is also little evidence that it prices low skilled workers out of jobs.

However, most migrants send remittances back to their home country, reducing the UK’s GNP. Second, it is often hard to predict when new migrants will arrive in a particular area- those who bring their families require access to schools and healthcare, putting a short term strain on these public services with larger class sizes and hospital waiting lists. Finally, highly skilled migrants tend to be attracted to regions such as London and the South East, their spending power pushing up property prices and raising the cost of living. Foreigners bought 49% of all properties worth over £1m in London last year.

Sir Andrew Green at the anti-immigration pressure group Migration Watch produces regular statistical updates and writes an interesting history of migration to the UK.

Paul Collier at the University of Oxford has a new book: Exodus: Immigration and Multiculturalism in the 21^st Century. In a recent Guardian article he argued that the benefit system for migrants is over-generous compared to elsewhere in the EU, not being based on past social security contributions. He argues migration has been positive overall but that a period of reduced migration is now required so that we can measure the long-term impact.

On the other side of the coin, 320 000 Britons left the country in the year to July 2013, China and India now being the top two destinations…