Obviously I hope your post is correct. The biggest point I'd worry about is your argument that "it seems very likely that the ~20-30% of main applicants that are required to have a PAYE job while in the UK that do not appear to have a PAYE job are simply not in the UK anymore." I doubt the government actually has the capacity to force people to leave within 60 days; and while I'm not particular au fait with the benefits system, (1) there are substantial benefits which are not classed as "public funds" (see e.g https://www.edrith.co.uk/p/actively-misleading-terms-undermine); (2) given the existence of large frauds in the recent past (e.g. https://www.bbc.co.uk/news/articles/cn330zkvnmyo), checks on past employment and contributions potentially aren't all that robust. (This latter point, of course, doesn't just apply to immigrants.)
Pakistani nationals have a considerably higher percentage (85%) with verified PAYE earnings, probably because Pakistani nationals are less likely to move home.
* Especially because the average American income in the dataset is £112,100 pa - I don't think there are that many under-the-table jobs paying that!
Re. NRPF: I actually think this is reasonably named!
The benefits that one can access are largely tied to your job. As an employed person, I am paying NI, so I get (some of) the benefits paid for by NI - e.g. statutory maternity, sick pay, incapacity benefit, job seeker's allowance. I already am unlikely to get the state pension - because I'm a US citizen and am unlikely to live in the UK for 35 years; I'd find it annoying if I paid NI for literally no benefit!
Great post, would love to see more accessible analyses about immigrant worker fiscal impacts for other high-flow countries as well (eg US, Canada, Germany)
"The latter is particularly likely because return migration - that is, leaving the country one immigrated to and returning to one’s native country - is quite common. Based on older UK data, 10% of immigrants leave within a year; 40% within five years."
Is that data pre or post Brexit? No expert but would guess that rates of returners were higher when we were in the EU as it was easier to work seasonally and short-term than it is now.
Do we have post Brexit (and post Covid really) data on this?
The question you’re trying to answer - whether the average immigrant pays more in taxes than they receiving benefits on public services - is a question that is not even worth asking because it has no relevance to public policy for the following reasons:
First, if an immigrant comes to this country and is paid the minimum wage to dig a hole and fill it in again every day, according to you this is of benefit to the British nation because they are paying tax on their earnings. But this is obvious nonsense. (Please don’t think this doesn’t happen. I have seen immigrants being paid to stand around doing nothing.)
Second, it doesn’t matter whether the AVERAGE immigrant is economically beneficial or economically detrimental because we are not faced with a simple choice between immigration of the level and composition we have now and no immigration at all. We can pick and choose who we let in.
(By the way, if you’re a UK woman in science or technology, is there any particular reason why do you use the American spelling of “Labour”? Just wondered.)
This was very interesting, thanks for writing it!
Obviously I hope your post is correct. The biggest point I'd worry about is your argument that "it seems very likely that the ~20-30% of main applicants that are required to have a PAYE job while in the UK that do not appear to have a PAYE job are simply not in the UK anymore." I doubt the government actually has the capacity to force people to leave within 60 days; and while I'm not particular au fait with the benefits system, (1) there are substantial benefits which are not classed as "public funds" (see e.g https://www.edrith.co.uk/p/actively-misleading-terms-undermine); (2) given the existence of large frauds in the recent past (e.g. https://www.bbc.co.uk/news/articles/cn330zkvnmyo), checks on past employment and contributions potentially aren't all that robust. (This latter point, of course, doesn't just apply to immigrants.)
Re. the ~20-30% that do not have a PAYE job are not in the UK anymore: I recognize that people may argue with me here!
My supposition is strengthened by the breakdown of % of people with PAYE earnings by nationality - e.g. only 76% of Americans with valid work visas have PAYE earnings (https://www.gov.uk/government/publications/sponsored-work-and-family-visa-earnings-employment-and-income-tax/sponsored-work-and-family-visa-earnings-employment-and-income-tax). I think the chance that those 1,248 Americans without PAYE earnings in the data set are probably not working under the table,* but have just moved home before their visa expires.
Pakistani nationals have a considerably higher percentage (85%) with verified PAYE earnings, probably because Pakistani nationals are less likely to move home.
* Especially because the average American income in the dataset is £112,100 pa - I don't think there are that many under-the-table jobs paying that!
Re. NRPF: I actually think this is reasonably named!
The benefits that one can access are largely tied to your job. As an employed person, I am paying NI, so I get (some of) the benefits paid for by NI - e.g. statutory maternity, sick pay, incapacity benefit, job seeker's allowance. I already am unlikely to get the state pension - because I'm a US citizen and am unlikely to live in the UK for 35 years; I'd find it annoying if I paid NI for literally no benefit!
Great post, would love to see more accessible analyses about immigrant worker fiscal impacts for other high-flow countries as well (eg US, Canada, Germany)
Great article - quick question on this bit
"The latter is particularly likely because return migration - that is, leaving the country one immigrated to and returning to one’s native country - is quite common. Based on older UK data, 10% of immigrants leave within a year; 40% within five years."
Is that data pre or post Brexit? No expert but would guess that rates of returners were higher when we were in the EU as it was easier to work seasonally and short-term than it is now.
Do we have post Brexit (and post Covid really) data on this?
This is pre-Brexit data (the link goes to the paper, 1992-2002). However, I don't expect it to be all that different post-Brexit, because cohort attrition actually looks fairly similar (based on the data we have). Compare the 2014 or earlier line to the 2023 line: https://migrationobservatory.ox.ac.uk/resources/commentaries/upward-mobility-earnings-trajectories-for-recent-immigrants/
More broadly, return migration seems to be remarkably similar in level across place and time. That 40% of UK migrants that return to their country of origin within 10 years? Actually basically the same as migrants to the US 1917 and 1924: https://lboustan.scholar.princeton.edu/sites/g/files/toruqf4146/files/lboustan/files/research26_returnmigration.pdf
The question you’re trying to answer - whether the average immigrant pays more in taxes than they receiving benefits on public services - is a question that is not even worth asking because it has no relevance to public policy for the following reasons:
First, if an immigrant comes to this country and is paid the minimum wage to dig a hole and fill it in again every day, according to you this is of benefit to the British nation because they are paying tax on their earnings. But this is obvious nonsense. (Please don’t think this doesn’t happen. I have seen immigrants being paid to stand around doing nothing.)
Second, it doesn’t matter whether the AVERAGE immigrant is economically beneficial or economically detrimental because we are not faced with a simple choice between immigration of the level and composition we have now and no immigration at all. We can pick and choose who we let in.
(By the way, if you’re a UK woman in science or technology, is there any particular reason why do you use the American spelling of “Labour”? Just wondered.)
I'm American; we're not actually banned from living and working in the UK.
Okay, I’ll let you off then!
Please address this counterargument: https://x.com/emergenteffects/status/1960757859970638186
I've responded inline to the thread. (Sorry for the delay; I'm organizing a conference next week, so haven't had time!)