Wednesday, November 5, 2014

...and they will come

So  London economist Ian Preston says, we ought to give some serious thought to the consequences of immigration on public finance;
Research suggests that there is no simple and general answer, applicable in all circumstances, to the size and direction of the effect of immigration in this respect (Preston 2014). Immigrants contribute through payment of taxes at the same time as they draw on public finances through consumption of publicly provided goods and services. Immigrants differ from native-born residents in demographic type, in skills and in social customs and consequently both groups pay different taxes and impose differently on public services.
Obvious, you'd think, but it's amazing how few economists actually think this way. the extent that migration is economically driven and that the economic rewards are affected by tax rates and entitlements to benefits in cash or in kind from public spending, there is potential for the composition of the immigrant population itself to be affected by the nature of public sector finances.
There is no way to answer the question of whether immigration affects the public exchequer of any particular country positively or negatively except by careful and comprehensive accounting. Pointing to particular visible burdens or contributions while ignoring less visible counterbalances is not helpful.
Our bold just above, because that's a useful way of thinking that goes well beyond immigration.

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