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Impact of skilled migrants – UK research explores

Posted on December  05 , 2013

Research by the UK National Institute for Economic and Social Research has found that recruiting skilled foreigners allows companies in many countries to become more efficient and expand their businesses.

A UK government supported study conducted in late October-early November, showed that foreigners fill a fifth of jobs in key industries such as engineering in Britain because of a lack of existing skills in Britain.

The researchers studied official figures on employment and concluded that foreign workers employed in Britain are on average better-educated and work longer hours than local British employees.

Hiring foreign workers can make companies more productive, the study suggested. Recruiting from outside the UK has “allowed employers to fill skilled and specialist roles and enabled some organisations to expand”, the researchers said. (The Telegraph).

The National Institute for Economic and Social Research (Max Nathan) also conducted a literature review of migration research, exploring “the wider effects of migration” on the economy, including skilled workers and investor migrants.

Despite a wide review of migration research, the research on the wider economic impact of skilled migrants on host countries is still under-explored, the researcher said.

In terms of investment, a number of studies have found positive causal links from the presence of skilled migrant to country-level bilateral investment levels / patterns. The evidence suggests that overall effects are highest for countries sending investors from where there is  little or no previous trade, so that gains to trade are biggest. However, there is less research on the host countries in this area.

More research on the USA as a host country was found than on other host countries. Descriptive studies have suggested that skilled migrants, especially those of South/East Asian origin, make significant contributions to the science and technology fields, both through innovative activity and entrepreneurship. A number of firm and area-level studies have also identified skilled migrant impacts on labour and firm productivity. Conversely, consumption side studies tend to link migration (as a whole) to rising prices, and to greater variety in non-tradable goods.

The empirical literature in European countries and the rest of the world is few and far between.  Results are also more mixed, reflecting the much greater heterogeneity in migrant levels and flows; sending countries and communities; and receiving country institutions. Generalisations are difficult, says the researchers, but within the EU, at least, studies typically have typically found small net positive effects of high skilled migrants on innovation, particularly through workforce diversity and in export-intensive sectors. The pattern of results for entrepreneurship and investment is harder to establish, although the qualitative and case study literature provides suggestive evidence of the importance of migrant entrepreneurship in a number of European countries.

The quality impacts of skilled migrants (for instance, the social value of inventions or
the value-added of new migrant businesses) is largely untouched in the research field. Some studies have looked at, for instance, the presence of migrant scientists in
scientific halls of fame, but broader measures of societal value have not yet been properly explored.