Thursday, 4 April 2013

When it comes to migration, there are no winners in the numbers game

NIESR's research for the Foreign and Commonwealth Office, by NIESR researchers Tatiana Fic, Mumtaz Lalani, and Heather Rolfe, on the impact of immigration from Bulgaria and Romania was published today. The key findings are discussed in detail by Heather Rolfe in the New Statesman here.  Here, Heather explains what's not in the research - an estimate of the numbers of new migrants likely to move to the UK from Bulgaria and Romania after January 1, 2014.


Speculation about migration from Romania and Bulgaria has barely been out of the news since the start of 2013. The countdown to midnight was shortly followed by a media countdown of 365 days to the lifting of interim restrictions on the right of citizens of the two countries to live and work in the UK. Like previous press coverage on migration, the focus has been on numbers. In January, the pressure group Migration Watch predicted a post-2014 flow of around 50,000 people from the two countries each year. At around the same time, the Daily Telegraph referred to work we at NIESR were conducting, which is now published, and to speculation that we would produce a figure. Our report includes no such predictions. We were not asked to produce one and never intended to. This is why.

Migration behaviour is unpredictable

As we know from the 2004 experience, when the UK allowed free movement of workers for the previous round of new EU Member States, forecasting migration is inherently very difficult. As previous NIESR research has shown, even sophisticated econometric models - let alone Migration Watch's guesstimates - are likely to be highly inaccurate. As the Telegraph has also pointed out, earlier research by NIESR in 2011 made estimates of potential migration flows based on the  UK's share of earlier migration from Romania and Bulgaria, but these were made before it was known that the UK would extend transitional controls, while other countries would not. 
Since then, some migrants who might have been expected to come to the UK have gone elsewhere, particularly Spain and Italy. 

Meanwhile, estimates based on survey evidence alone are worthless; surveys about migration intentions of Bulgarians and Romanians do exist, but they simply measure an interest or potential willingness to migrate. Whether they remain a dream or become reality depends on a whole host of other factors; they should not be used as a basis for policy making in the UK any more than France should prepare for a middle class invasion of Provence.

The UK is not a favoured destination for Romanians and Bulgarians, with Spain, Italy and Germany more attractive to prospective migrants. However, there is still considerable uncertainty, since migration is highly dependent on economic, political and social factors in sending and potential host countries. Of all the factors behind migration decisions, economic ones are possibly the most unpredictable, yet for prospective Eastern European migrants they are most important – they are attracted by the opportunities to work.

Some migration from Bulgaria and Romania to the UK has already happened


The UK’s doors are not opening in 2014 for the first time for Bulgarians and Romanians. Significant migration from the two countries has already happened but they haven’t been able to work where they choose. They have been largely confined to shortage sectors including hospitality, cleaning services, construction and trade, and to self-employment. These existing migrants may stay put once restrictions are lifted, but may change jobs. Another possibility is that some migrants currently in the UK may move elsewhere within the EU once restrictions are lifted across the EU in 2014.
If not numbers – what should migration debates focus on?

The focus of our report is on the potential impact of migration on demand for services. Those who plan service provision properly do not use overall population estimates – they look at the characteristics of populations. All evidence on current and future migration from Eastern Europe shows consistently that migrants are young and healthy, they come to the UK to work and not to claim out of work benefits, as a recent article by NIESR director Jonathan Portes clearly explains; even Migration Watch agree.

Meanwhile, they tend to under-use services such as health, welfare benefits and social housing. Whether they make demands or not depends crucially on whether they settle in the UK. But settlement of migrants doesn’t just bring costs, it brings benefits to the UK, in the form of skills, tax revenue and, in the case of schools, it seems they improve performance rather than drain resources. We shouldn't forget these important contributions which include working in our health and social care services, building our houses and caring for our children. If we continue the numbers game we’ll lose sight of the real issues around migration, so let’s end it and start talking sense.

23 comments:

  1. I think that's the point... After the disaster with the Polish estimates, people have learnt it is nigh on impossible to predict how many will come.

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    1. Jonathan Portes appears to have deleted my comment but not your response to it. It seems he cannot take criticism nor engage in actual debate. This tells you all you need to know about the NIESR.

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  2. I am Romanian and I tell you, they won’t come. You, Brits, are paranoid or infatuated with yourself. And remember, Romania was never part of the mighty British Empire. Probably that is what really bothers you.

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  3. Migrants may under use public services when they first arrive but once they have children the situation changes. They are entitled to substantial in work child benefits and the children require schools. If the immigrants are in low paid jobs they will pay insufficient tax to cover the costs of public facilities they will use over their lifetime.

    I fail to see how the influx of low-paid migrants into the UK, whether from outside the EU or within it, benefits existing residents.






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  4. Of course one of the pieces in the 'numbers game' which is rarely discussed by Immigrationists is the capital cost of an immigrant, in terms of the infrastructure that needs to be in place for him to function economically from the day of arrival.

    Few immigrants except perhaps the occasional oligarch arrive with sufficient capital to offset their share of the cost of the accumulated infrastructure that they use, and even fewer will create sufficient added value during their working lifetime to pay for it either.

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    1. Your evidence for this is what exactly? You are also confusing the cost of the existing capital stock with the flow value of the services derived from it. For the reasons set out in my dialogue with Martin Wolf, immigrants with relatively high skills/productivity are likely to be a net benefit fiscally, taking all these factors into account.

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    2. Taking a very simplistic approach to FPP's point, very few people joining Shell bring an oil well with them, but Shell seems to think it's worth employing them.

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    3. "Very simplistic", your words not mine.

      I presume you are using Shell here as a proxy for all the MNCs, based in the UK or in other developed countries, which bring in their own and third country nationals to fill higher-level technical and management positions, or for training within their headquarters or subsidiary operations here in the UK.

      That being the case, you should be aware that many of these assignments are of a temporary nature and, following the end of the period of secondment, the 'migrants' in question are overwhelmingly likely to either return to their home countries or to a posting somewhere else.

      Very few of them will be staying on permanently, as can be observed by a glance at the long-term statistics for grants of settlement. Nationals of other developed countries (USA excepted) are a very small minority of those who settle permanently, whose children will require places at British schools, whose families will be using the NHS and who, most importantly, will be calling on the benefits system in its 'in-work' or 'out-of-work' forms.

      It is the other migrants, the ones who stay permanently and who overwhelmingly originate in poor or third-world countries for whom the infrastructure question looms largest in the bigger picture.

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    4. In response to Jonathan Portes's comment above, asking "What is your evidence for this precisely?", my response would be "Exactly!".

      There is no evidence as far as I have been able to determine that any of the normative researchers and commentators on the immigration question have paid any serious attention to what might be termed the capital account side of the story.

      The only somewhat recent effort to do so was by the Social Affairs Unit in 2007. Its report "Warning: Immigration can seriously damage your wealth" reached the following conclusion:

      " ... our further analysis (using 2004 figures) concludes that only immigrant workers who bring £141,000 of capital per head into the UK (i.e. the amount of total British wealth divided by the total number of British workers), or £282,000 for a family of four; who make no foreign remittances; and who have at least the mean average skills of natives can possibly be of economic benefit to native Britons (this study excludes fiscal and national identity costs)."

      http://socialaffairsunit.org.uk/digipub/content/view/18/27/

      The authors acknowledge the flaws in their methodology, largely due to questions of data sufficiency, however it is noticeable that nobody except Migration Watch has ever made any significant contribution to resolving this question.

      Sounds like a project tailor-made for NIESR, except that you are highly unlikely to to find of your usual benefactors in the EU, HMG or big business willing to fund it. It's not likely, after all, to result in finding be congruent with the approved narrative that Immigration is Good for Us™

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    5. "I presume you are using Shell here as a proxy for all the MNCs, based in the UK or in other developed countries, which bring in their own and third country nationals to fill higher-level technical and management positions, or for training within their headquarters or subsidiary operations here in the UK."

      No, not really. Many people work for companies or countries with massive sunk capital costs. Even heroic entrepreneurs if we start in developed countries. Both immigrant and native born are standing on the shoulders of giants. Are you suggesting that we expel low paid native born workers on the basis that they are providing insufficient return on capital?

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    6. "Are you suggesting that we expel low paid native born workers on the basis that they are providing insufficient return on capital?"

      No. Because, as you rightly state, they stand on the shoulders of giants, their forebears who have over centuries accumulated the capital assets whose use we now enjoy. Immigrants may also stand on the shoulders of giants, but if they do do, they are different ones.

      If this dialogue proceeds further I hope we can avoid yet another recitation of the 'you were there, so now we're here and you owe us' argumentation and related hoary old chestnuts.

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  5. The NIESR report certainly looks to be an impressive piece of work even if the authors are understandably reluctant to take a Dustmannesque stab at the likely number of A2 entrants starting in 2014.

    I was curious however about one particular aspect of the report. There are several references to the effect that the report "... was commissioned to provide evidence from which the UK Government can assess the potential impacts of migration from EU2 countries."

    Does this mean that it was commissioned by the government, and if so, which department(s)? If not, who did commission it?

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    1. It was commissioned by the FCO (see intro para above)

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    2. Dear FPPeterson,

      You clearly are knowledgeable in this field.

      I would be delighted to discuss these issues further. If you wished to get in touch with Migration Watch UK our email address is info@migrationwatchuk.org

      Best

      Andrew Green

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  6. I find it difficult to avoid the conclusion that the default position of the liberal establishment is"immigration is a good thing". Any opposition prompts a call for evidence but repeating the establishment line does not.

    The last paragraph of the article above demonstrates this. It is full of confident assertions about the benefits of immigration, even low-wage immigration. But where is the evidence for such confident assertions? Where is the evidence that existing residents have benefited from low-wage immigration?

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    1. You could start here:
      http://www.cream-migration.org/publ_uploads/CDP_18_09.pdf

      Of course there are a lot of assumptions, and 3 different scenarios. You may be able to assume that the additional cost of more people is the marginal cost or average cost if the numbers are small, but if you need more schools, hospitals, power stations, subsidised transport etc ...

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    2. Is the Christian Dustmann who is one of the principal authors of this report the same Christian Dustmann who advised the previous government in 2003 that the likely influx of A8 nationals would be no more than 13,000 annually?

      Wrt to schools etc you do of course make a valid point. With over a quarter of primary school pupils now immigrants or the offspring of recent immigrants, and with the secondary school population heading on the same trajectory we clearly have many more schools than would otherwise have been necessary had the floodgates not been opened. Ditto for hospitals etc etc.

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    3. Yes, the same Dustmann:
      http://discovery.ucl.ac.uk/14332/1/14332.pdf

      But it wasn't his fault that Germany kept controls and the 200,000 a year that were predicted to go to Germany came to the UK.

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    4. Yes, I'd actually gathered he was one and the same. It's curious though that he waited almost ten years before lodging his protests against 'misinterpretation'.

      http://www.bbc.co.uk/news/uk-politics-21682810

      In the Executive Summary to the report itself (HO 25/03), the following statement appears:

      "... In the case that Germany restricts free movement of workers for a longer period than the UK, some of those immigrants to Germany may use the UK as a destination. However, even in the worst case scenario, migration to the UK as a result of Eastern enlargement of the EU is not likely to be overly large."

      And then later:

      ”... From Table 6.4, it is obvious that predictions of future migration flows from the AC-10 to both Germany and the UK are small. If Germany imposes a transition period for the free movement of workers, it is likely that only a small fraction of those who originally intended to migrate to Germany to work will decide to move to the UK instead. The data on migration intentions reviewed in Chapter 4 suggest that the UK is not a very popular migration destination, and that it ranks equally with some other European nations. Any figure chosen would be an ad hoc
      suggestion, but we would not think that more than one in three immigrants who had intended tomigrate to work in Germany would instead migrate to the UK if Germany had a transition period for a limited period."

      It seems clear from this that in 2003 Dustmann discounted the importance of German transitional controls as a key determinant of future A8+2 migration flows to the UK, so he might be said to now be protesting overmuch.

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    5. Returning then to matter at hand, Dustmann's more recent research concerning A8ers and benefits, I know there is a separate older thread on here for that particular topic, I thought this might go better here since you've recently raised in support of the fiscal contributions/benefits question.

      Conerning that report, the fly in this particular ointment is that the CReAM A8 benefits study is that it is not an apples-to-apples comparison (as its authors readily concede).

      It compares the economic profile of an overwhelmingly young (and single) migrant group with ‘natives’, that is: a much larger cohort with entirely different demographic characteristics and correspondingly variegated need to call upon particular elements of the benefits system. The ‘native’ cohort also includes the offspring of other recent migrant groups whose overall fiscal contribution may or may not be congruent with that of the actual indigenous population (other evidence suggests it is not). It would have been far more useful if Dustmann et al had used a ‘native’ cohort with comparable age and family status characteristics for their comparator. A further, perhaps, minor point that might have borne more emphasis is that, during the entire period under review (2004-2009) A8 entrants were denied benefits for their first twelve months, effectively reducing the pool of potential A8 claimants by 20% overall.

      The term ‘state benefits’ is not well-defined either. There is a entire panoply of ‘in work’ and ‘out of work’ benefits to which A8 workers were and are entitled. Most ‘natives’ will be unaware of the full scope and scale of the system but A8 entrants might well be better-informed, especially with helpful websites like this one to guide them through the thicket (similar websites are now springing up in Romanian and Bulgarian).

      http://www.benefity.org.uk/

      The report makes copious reference to social housing and the (below average) call that A8 migrants make upon that resource, however there is only passing reference to housing benefit which is of course more readily available to recent migrants in general than social housing itself. The extent to which the A8 cohort was able to call upon housing and other locallly-administered benefits remains obscure in the report.

      Since the report indicates that the overwhelming majority (71% per the CReAM website) of the A8 migrants studied were in low paid work and their median hourly wages were only around 2/3 those of ‘natives’ it seems somewhat counter-intuitive that so few of them would be accessing the benefit system in one form or another.

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    6. I agree that it probably greatly overestimates the net fiscal benefits even in the most pessimistic of the 3 scenarios.

      There is an assumption that A8 migrant workers pay the same amount of tax that similar settled workers pay. There are 2 reasons why I do not think this is true (especially for those intending to stay for only a few years):
      A) migrant workers are significantly more likely to be working via a staffing agency and be involved in 'salary sacrifice' and 'pay day by pay day' schemes that reduce the tax and NIC paid. HMRC uncovered this about 4 years ago and has been trying to clamp down on it. Cordant even tried to block NMW changes to close some loopholes in 2010 on the grounds that it was discriminatory against the many non-UK nationals that benefit from lower taxes.
      B) Many A8 migrants having a higher propensity to save. They come to the UK to work for a few years, save as much as they can and return home. For low paid workers, VAT is the main tax contribution, so more saving and less spending means much lower taxes.

      I think Dustmann et al and other experts are probably right that the longer migrants stay then the more like setled workers they become e.g. median salaries for A8 migrants that have been here for 5 years are much closer to the UK median.

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  8. It compares the economic profile of an overwhelmingly young (and single) migrant group with ‘natives’, that is: a much larger cohort with entirely different demographic characteristics and correspondingly variegated need to call upon particular elements of the benefits system. The ‘native’ cohort also includes the offspring of other recent migrant groups whose overall fiscal contribution may or may not be congruent with that of the actual indigenous population (other evidence suggests it is not). It would have been far more useful if Dustmann et al had used a ‘native’ cohort with comparable age and family status characteristics for their comparator. A further, perhaps, minor point that might have borne more emphasis is that, during the entire period under review (2004-2009) A8 entrants were denied benefits for their first twelve months, effectively reducing the pool of potential A8 claimants by 20% overall.

    The term ‘state benefits’ is not well-defined either. There is a entire panoply of ‘in work’ and ‘out of work’ benefits to which A8 workers were and are entitled. Most ‘natives’ will be unaware of the full scope and scale of the system but A8 entrants might well be better-informed, especially with helpful websites like this one to guide them through the thicket (similar websites are now springing up in Romanian and Bulgarian).

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