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Study tallies fiscal benefits of migration

21 February 20140 comments

RicWallis-092Migrants make substantial economic contributions to the societies they settle in, according to new research from Britain.

The study, by University College London researchers, said recent immigrants were less likely to claim benefits and live in social housing than people born in Britain.

The authors said rather than being a “drain”, their contribution had been “remarkably strong”.

The report comes as the UK Government is moving to restrict welfare payments to migrants from the European Union amid claims of ‘benefits tourism’.

Immigrants to the UK since 2000 have made a “substantial” contribution to public finances, the report said.

Those from the European Economic Area (EEA – the EU plus Norway, Iceland and Liechtenstein) had made a particularly positive contribution in the decade up to 2011, the authors noted, contributing 34% more in taxes than they received in benefits and services.

“Given this evidence, claims about ‘benefit tourism’ by EEA immigrants seem to be disconnected from reality,” one of the study’s authors Christian Dustmann, professor of economics at University College London, said.

The outcome is slightly different for immigrants who came to the UK from outside the EEA in that period. They also put more into the public purse than they took out, but by a smaller margin of 2%.

Immigrants who arrived after 1999 were 45% less likely to receive state benefits or tax credits than UK natives in the period 2000-2011, according to the report by Prof Christian Dustmann and Dr Tommaso Frattini from UCL’s Centre for Research and Analysis of Migration.

They were also 3% less likely to live in social housing.

“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,” the authors say.

Focusing on the most recent immigrants gives a clear view of how much immigrants contribute to the public purse in the first few years of their stay in the UK, but it also doesn’t give a complete picture, because what you are capturing is a very particular time in their lives – some of their youngest, most productive years.

To make sense of the numbers, it helps to break them down a little – to divide the net contribution to the public purse by the number of people in each group under study.

Between 1995-2011, on average, each EEA immigrant put about £6,000 more into the public purse than they took out.

Over the same period, British people paid 11% less in tax than they received.

“Given this evidence, claims about ‘benefit tourism’ by EEA immigrants seem to be disconnected from reality,” the authors said

Over the same period, British people paid 11% less in tax than they received.

Research by Westpac on new Australians, released to coincide with Australia Day, reveals migrants contribute $200 billion to the Australian economy annually and almost one quarter are in jobs earning $70,000 or more.