Researchers at the Centre for Competitive Advantage in the Global Economy (CAGE), based in the Economics Department of Warwick University, demonstrate how much migrants are bringing into the UK economy. Migrants in the top 1% of earners contribute 8% of the UK’s entire income tax bill. That was £16 billion in the 2019-20 tax year.
This shows the political ‘immigrants are an economic strain’ argument in a different light. But it also raises the question of the UK “importing inequality”, in terms of wealth distribution.
What did the authors of the paper actually research?
The paper’s title is ‘Importing inequality: Immigration and the Top 1 percent’ (CAGE working paper no. 508) and the researchers are Arun Advani, Felix Koenig, Lorenzo Pessina and Andy Summers.
They used anonymised self assessment and PAYE data from HMRC, between the years 1997 and 2018. They determined which information belonged to a foreign national by looking at their National Insurance numbers.
National Insurance numbers are issued to British citizens when they are 16. Therefore any individuals receiving their National Insurance number after that age are most likely to be foreign nationals. They could then compare nationality, income earned and tax paid.
What are their findings?
There are several ways to interpret the data the research produced. Some of the results include:
- 24% of the top 1% of earners moved to the UK as an adult. 525,000 people earning over £128,000.
- Only 15% of the whole UK population are migrants.
- 85% of the growth in the top 1% income share “can be attributed to migration”, over the last 20 years.
- In 2018, there were 52% more migrants in the top 1% than in 1997.
- There are more than double the number of migrants in the top 0.01% in 2018 than there were in 1997.
In terms of actual jobs, here are four interesting examples:
- 31% of top-paid workers are migrants in professional sport
- Top earning bankers earn and average, pre-tax amount of £383,300 and four in 10 of them are migrants.
- Web portal work has migrants as 51% of its highest earners.
- In UK hospitals, 40% of the staff with the biggest salaries are migrants, with annual earnings of £160,400.
What conclusions have the researchers come to?
Arun Advani, one of the research team, told The Guardian: “I was genuinely surprised, and we spent a long time convincing ourselves that we weren’t screwing it up. But we checked and triple-checked it and it was correct.” He also said that HMRC have checked and confirmed the data results.
And their summary ends with: “By bringing migration into the picture, we highlight that the top 1% of people are not a fixed population, and that migration can amplify top-income growth. In the UK, migration can account for the majority of top-income growth in the past two decades and can help explain why the UK has experienced an outsized increase in top incomes.”
It’s a different way to look at the UK’s economy and see that the focus of low paid migrant work should be considered alongside their position as top 1% and 0.01% earners. Their tax contribution is enormous.
But is this another element that increases the gap between the richest and less financial well-off? Predictably, one question answered provokes a range of others.