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Migration drives productivity, public finances and personal wellbeing – report

16 October 20180 comments

A new British Government report looking at the impact of migration in the UK has broken new ground in assessing the effect it has on economic productivity and growth and even the wellbeing of the individual.

The report, by the UK’s independent Migration Advisory Committee, drew on new research across the disciplines of economics, training and public finances to produce a positive picture of migration.

The report comes as Britain moves to complete its Brexit negotiations with the European Union and as the Conservative government repeatedly commits to lower the intake of migrants to the UK.

The report found that overall immigration appeared to have a positive impact on productivity.

It found that a one percentage point increase in the share of immigrants within a UK local authority is associated with an almost three percentage point increase in productivity, measured as the growth in gross value output per head over the period considered.

This result holds true for both short and long-term changes, and both at the local authority and the travel-to-work area level, the report said.

The study found that both migrants in high and low-skilled occupations are more productive than their UK-born counterparts, with some estimates saying that a migrant is around 2.5 times as productive as a UK-born worker.

The report found migrants from both EU countries and non-EU countries were expected to make a significant positive net contribution to the UK public finances, with the average EEA migrant arriving in 2016 contributing a discounted total of around £78,000.

Overall, the net present value (NPV) of the future net contribution of 2016 arrivals to the UK public finances is estimated at £25 billion, or about 1.3 per cent of the UK’s GDP, the report said

Training rates have been falling in the UK for the last two decades and it has been argued that this may reflect reduced incentives for employers to provide training for native workers, but the research concludes there is no evidence that migration has had a negative impact on the training of the UK-born workforce.

The report also found that the impact of immigration on life satisfaction at a local authority level is actually positive.

It says that however people may respond to opinion polls about immigration at the national level, the evidence does not suggest that people living in areas with higher levels of immigration experience lower levels of wellbeing as a consequence.

A common argument against migration is that it makes labour markets more competitive and drives wages down. But the report says that that immigration has had little impact on native employment or wages overall, although there may have been relatively small impacts on lower paid or lower skilled workers.






Laurie Nowell
AMES Australia Senior Journalist