{"text":[[{"start":5.4,"text":"Over the past decade or two, concerns about the economic impacts of immigration on high-income countries have shifted from fears that incomers are taking the jobs of existing residents to worries that the low (or no) pay of arrivals will place a growing financial burden on the host country."}],[{"start":22.32,"text":"This shift is reflected both in heated commentary and in the increasing use of economic modelling to forecast immigrants’ fiscal impact, but both are subject to faulty assumptions that can make for a frustrating debate."}],[{"start":34.76,"text":"On the one hand, official modelling by organisations such as the UK’s Migration Advisory Committee tends to assume all immigrants share similar economic trajectories; meanwhile, some commentary on the right argues that fiscal impacts are determined by immigrants’ countries and cultures of origin. Both miss the fact that the nature of a country’s fiscal system and its policies shape the extent to which immigrants with different economic characteristics are a net cost or net contributors."}],[{"start":62.4,"text":"The UK is a striking example. Its comparatively low rates of tax and social insurance contributions for low-paid workers plus a relatively flat state pension mean that people (immigrant or otherwise) who do small amounts of paid work or remain on low incomes contribute little to the exchequer but still benefit from robust state support. In Germany or France’s fiscal systems, someone with the same weak employment and earnings patterns would generate much larger receipts from tax and social insurance due to the flatter tax regime, and would receive a comparatively smaller pension since these are linked more tightly to lifetime earnings."}],[{"start":null,"text":"
"}],[{"start":98.48,"text":"The result is that in order to be a net fiscal contributor over their lifetime, the average couple arriving in the UK at age 30 needs the primary earner to have a salary at the 55th percentile of the overall earnings distribution, compared to the 45th in France and 28th in Germany. This is according to a new working paper on the fiscal impacts of immigration in different European countries by Usama Polani, a researcher at the Stanford Institute for Economic and Policy Research."}],[{"start":127,"text":"Put another way, for immigration to be financially beneficial to the state, the UK needs to attract migrants with much higher pay and rates of employment than its peers, because low-wage or inactive families — whether native or immigrant — exert a much greater net fiscal cost in Britain than elsewhere."}],[{"start":null,"text":""}],[{"start":142.88,"text":"The changing composition of migrant flows means this is only likely to become a more pressing issue in the years ahead, and not just for the UK. Both on living standards and low birth rates, convergence between the world’s richest countries and the tier just below means that inflows from other high-income countries have been declining in relative terms. Arrivals from countries with lower incomes and education levels, or different economic norms, such as much lower rates of female employment, have been rising."}],[{"start":172.52,"text":"As Polani’s analysis shows, fiscal impact models whose assumptions about pay and participation are based on cohorts with very different economic characteristics risk overestimating tax revenues and understating benefit spending for today’s intakes."}],[{"start":186.96,"text":"At the same time, it would be wrong to treat demography as destiny. A 2021 analysis by Denmark’s Ministry of Finance found that immigrants from non-western countries cost the state a net 31bn kroner in 2018 — equivalent to 1.4 per cent of its GDP that year. But that figure was down from 42bn three years earlier. One factor contributing to that has been a steady rise in the employment rate of women from the Middle East, north Africa, Pakistan and Turkey, which was 40 percentage points below Denmark-born women in 2015 but had closed to roughly 20 points behind by 2024."}],[{"start":null,"text":""}],[{"start":226.28,"text":"However, that has not been matched in other countries including the UK, France and Germany, suggesting that economic assimilation does not always happen organically. There is a debate as to how much of Denmark’s success comes from its introduction of a requirement for new arrivals to do substantial paid work before they qualify for higher levels of benefits and how much from its strong recent economic performance."}],[{"start":248.88,"text":"There are three lessons here. First, “immigration” is not a fixed thing across time and place. Second, its economic impacts are shaped by the policies as much as the people. And third, if the nature of immigration changes, the policies may need to as well."}],[{"start":249.38,"text":"john.burn-murdoch@ft.com, @jburnmurdoch"}],[{"start":271.8,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789813194_6144.mp3"}