1 A Note on Dustmann and Frattini’s Estimates of the Fiscal Impact of UK Immigration

• Main Author: Robert Rowthorn
• Other Authors: The Pennsylvania State University CiteSeerX Archives
• Format: Text
• Language: English
• Published: 2014
• Subjects: Norway; Iceland
• Online Access: http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.571.2531; http://www.civitas.org.uk/pdf/rowthorndustmannfrattini.pdf

In a widely quoted working paper Dustmann and Frattini (2013a), henceforth D&F, estimate the fiscal impact of UK immigration. They distinguish between migrants born in countries of the European Area (EEA)1 and those born elsewhere. They also distinguish between migrants who arrived after 2000 and those who arrived previously2. Their main conclusion is that recent migrants from the EEA have generated, and continue to generate. a large fiscal surplus. The taxes they pay far exceed the amount they receive from the government in the form of cash benefits and public services. Recent migrants from outside the EEA also generate a fiscal surplus. The picture is much less favourable for migrants who arrived before 2001. Table 1 summarises the data on population and employment used by D&F. The authors do not give separate series for pre-2001 migrants, so these have been derived by subtracting the series for post-2000 migrants from the corresponding series for all migrants. By 2011, approximately half of all migrants living in the UK had arrived since 2000. Almost two thirds of all EEA migrants who were in employment and over half of all non-EEA migrants in employment had also arrived since 2000. Thus, recent arrivals account for a large and growing fraction of the total migrant stock. Since most migrants are young when they first arrive, the recent surge in immigration explains why the average age of the migrant stock is now so low. Figures 1 and 2 show in detail how employment has changed since the relevant base year. Total employment grew strongly until 2007, then fell in the wake of the financial crisis and later recovered, so that by 2012 it was somewhat higher than its previous peak. The study of 1 The EEA consists of the 27 countries of the European Union plus Iceland, Liechtenstein and Norway. 2 Children under 16 years of age who are born in the UK to immigrant parents are classified as immigrants. On reaching 16 they are reclassified as UK natives. This helps to explain why there is a sharp fall in later ...