Report shows positive contribution immigrants make in the UK

by Ray Clancy on November 11, 2013

UK immigrants who have arrived in the country since 2000 have made a considerable positive net contribution to the UK’s fiscal system, a new report shows.

Relief of the fiscal burden on UK born workers and better education are factors in the positive impact of immigrants, according to a new analysis of the fiscal consequences of immigration to the UK, published by the Centre for Research and Analysis of Migration (CReAM) at University College London.

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Large net fiscal contributions of recent EEA immigrants are their higher average labour market participation compared with natives and their lower receipt of welfare benefits, according to the report.

The positive contribution is particularly evident for UK immigrants from the European Economic Area who have contributed about 34% more in taxes than they received in benefits over the period, says the report, written by Professor Christian Dustmann and Dr Tommaso Frattini.

The report provides an in-depth analysis of the net fiscal contribution of EEA immigrants in each fiscal year since 1995. It found that recent immigrants, those who arrived after 1999 and who constituted 33% of the overall immigrant population in the UK in 2011, were 45% less likely to receive state benefits or tax credits than UK natives over the period 2000/2011.

Immigrants were also 3% less likely to live in social housing. Over the same period, recent EEA immigrants have on average contributed 34% more in taxes than they have received as transfers. Recent immigrants from countries outside the EEA have contributed 2% more in taxes than they have received as transfers.

In contrast, over the same period, the total of UK natives’ tax payments were 11% lower than the transfers they received.

Recent immigrants also held high-level qualifications, the report found. In 2011, 32% of recent EEA immigrants and 43% of recent non-EEA immigrants had a university degree. The comparable figure for UK natives is 21%.

The report says that the main reasons for the large net fiscal contribution of recent EEA immigrants are their higher average labour market participation compared with natives and their lower receipt of welfare benefits.

‘Our research shows that in contrast with most other European countries, the UK attracts highly educated and skilled immigrants from within the EEA as well as from outside,’ said Professor Christian Dustmann, director of CReAM and co-author of the study.

‘What’s more, immigrants who arrived since 2000 have made a very sizeable net fiscal contribution and therefore helped to reduce the fiscal burden on UK born workers. Our study also suggests that over the last decade or so, the UK has benefited fiscally from immigrants from EEA countries, who have put in considerably more in taxes and contributions than they received in benefits and transfers,’ he explained.

‘Given this evidence, claims about benefit tourism by EEA immigrants seem to be disconnected from reality,’ he added.

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