Ukrainian displaced people - economic impact of migration: discussion paper

Economic impact of migration

Economic literature finds that migration tends to have an overall positive effect on the host economy (Migration Advisory Committee, 2018). Migrants who find work in Scotland can directly contribute to our economy through increasing the supply of labour, thereby boosting productive capacity, resulting in higher levels of economic activity and employment. Migrants can also help address skill and labour shortages in key sectors and regions.

Furthermore, there is little or no evidence that recent migration to the UK has had a significant negative effect on wages, public service access or employment and training opportunities for the resident population on average. There is some evidence of a negative impact on wages in the lowest-skilled and lowest-paid occupations, but this is marginal (CEPR, 2018). Work by Dustmann and Frattini (2014) found that from 1995 to 2011, immigrants from the European Economic Area (EEA) made a positive fiscal contribution, while non-EEA immigrants, not dissimilar to the native population, made a negative contribution. However, more recent long run analysis, based on a dynamic lifecycle approach has found that both EEA and non-EEA migrants will contribute more to government revenue through taxes than they take out through public services (Oxford Economics, 2018). Migration is also associated with increased productivity and innovation, and various studies conducted on behalf on the Migration Advisory Committee (MAC) find that a one percentage point increase in the migrant share of the workforce is associated with a productivity improvement of between 1.2% and 3% in the UK (Migration Advisory Committee, 2018).