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COMMENTS 

Does Eastern Europe have lessons for Brexit Britain?

What, if anything, can the experience of (research on) Eastern Europe say to us as we head towards Brexit? Lessons may lie above all in getting to grips with the tempo and nature of political change, its (un)predictability and likely channels.
Sean Hanley
1 August 2016
More...

Starts: Aug 1, 2016 12:00:00 AM

Hollande's response to the Nice massacre will please only the far right

On Thursday night, for the third time since January 2015, President François Hollande was faced with a mass murder on French soil. An ashen-faced Hollande, almost looking like a broken man, appeared on television on Friday at 4am and declared: “This is undoubtedly a terrorist attack; the whole of France is under the threat of an Islamic terrorist attack”.
Philippe Marlière
18 July 2016 More...

Starts: Jul 18, 2016 12:00:00 AM

Roman oratory and the EU referendum campaigns

In addition to marking a politically decisive moment in British history, the campaigns in advance of the referendum on the UK’s membership in the EU were exciting objects of study for Classicists in terms of the political use of oratory.
Gesine Manuwald
11 July 2016 More...

Starts: Jul 11, 2016 12:00:00 AM

The Fiscal Effects of Immigration to the UK

Publication date: Nov 27, 2013 12:32 PM

Start: Nov 27, 2013 12:00 AM

Recent EEA immigrants to the UK have have made a net fiscal contribution of about £22.1 billion between 2001 and 2011.
Prof Christian Dustmann
and Dr Tommaso Frattini
November 2013


The impact immigration has on the tax and welfare system and the net fiscal consequences of immigration is perhaps the single most important economic issue of concern in the public debate when assessing the pro’s and con’s of immigration in the UK. There are claims that immigrants from Europe free-ride on the benefit- and health system, resulting in demands that not only should their access to benefits and public services be restricted, but that immigration from European Economic Area (EEA) countries should be restricted.

Following this debate, it is surprising how little well researched evidence exists on how much immigrants take out of, and contribute to, the public purse.  A recent paper we published with the Centre for Research and Analysis of Migration (CReAM) at University College London fills precisely this void. Based on the UK Labour Force Survey and a multitude of government sources, we computed the fiscal net contribution of natives and immigrants by assigning individuals their share of cost for each item of government expenditure and identifying their contribution to each source of government revenues.

Our findings were quite remarkable. The contribution of recent (post-1999) immigrants to the UK fiscal system has been consistently positive and astonishingly strong. Between 2001 and 2011, those recent EEA immigrants contributed to the fiscal system 34% more than they took out, with a net fiscal contribution of about 22.1 billion GBP.  At the same time recent immigrants from non-EEA countries made a net fiscal contribution of 2.9 billion GBP, thus paying in the system about 2% more than they took out. In contrast, over the same period, natives’ fiscal payments amounted to 89% of the amount of transfers they received, or an overall negative fiscal contribution of 624.1 billion GBP. The net fiscal balance of overall immigration to the UK between 2001 and 2011 amounts therefore to a positive net contribution of about 25 billion GBP, over  a period over which the UK has run an overall budget deficit.

In other words: our analysis clearly suggests that – rather than being a drain on the UK’s fiscal system – immigrants arriving since the early 2000s have made substantial net contributions to its public finances. It is a reality that contrasts starkly with the view often maintained in public debate.

Our conclusion is further supported by evidence on the degree to which immigrants receive tax credits and benefits compared to natives.  Recent immigrants are 45% (18 percentage points) less likely to receive state benefits or tax credits. These differences are partly explainable by immigrants’ more favourable age-gender composition. However, even when compared to natives with the same age, gender composition, and education, recent immigrants are still 21% less likely than natives to receive benefits.

We can thus conclude that the recent waves of immigrants – i.e., those who arrived to the UK since 2000 and who have thus driven the stark increase in the UK’s foreign born population – contributed far more in taxes than they received in benefits. 

We also want to point out that immigrants, by sharing the cost of fixed public expenditures (such as defence), which account for 23% of total public expenditure, reduce the financial burden of these fixed public obligations for natives.  In addition, most immigrants arrive to the UK after completing their education abroad, and thus at a point in their lifetime where the discounted net value of their future net fiscal payments is positive. If the UK had to provide domestically to each immigrant the level of education they have acquired in their home country (as it does for natives), the costs would be very substantial.

Finally, our research has shown just how strong the educational back ground is of immigrants who come to the UK. For instance, while by 2011, the percentage of natives with a degree was 21%, that of EEA and non-EEA immigrants was 32% and 38%, respectively.  Similarly, about one in two native born individuals fall into the “low education” category (defined as those who left full- time education before 17), while only one in five EEA immigrants and one in four non-EEA immigrants do so.