The impact of migration on the provision. of UK public services (SRG ) Final Report. December 2011

Transcription

1 The impact of migation on the povision of UK public sevices (SRG ) Final Repot Decembe 2011 The obustness The obustness of the analysis of the is analysis the esponsibility is the esponsibility of the authos, of and the the authos, findings and the views findings pesented in this epot do and not views necessaily pesented eflect in those this of epot the MAC. do not necessaily eflect those of the MAC. The The obustness obustness of the analysis of the analysis the esponsibility is the esponsibility of the authos, of and the the authos, findings and the views findings pesented and in views this epot pesented do not in this epot necessaily do not eflect necessaily those of eflect the MAC. those of the MAC. 1

2 Contents Executive Summay Intoduction Existing Liteatue and Conceptual Issues Wages, Wage Setting, and Employment in the Public and the Pivate Secto Immigation and the health, cae and education sectos The health secto The social cae secto Education Analysis Data Souces: the UK LFS Employment of Natives and Immigants in the Public and Pivate Sectos Immigants chaacteistics Occupational and sectoal distibution Regional analysis Wage Stuctue Mobility ove time Discussion and Conclusions Refeences Figues Tables Tables Appendix

3 Executive Summay Peliminaies The public secto in the UK compises of thee main sub-sectos o industies: health and social cae, education, and public administation. The existing liteatue mainly discusses the ole of immigants in the health and social cae sectos, but even fo this secto, quantitative evidence is ae. Even less in known about the ole of immigants in aeas such as public administation and education. This epot povides evidence on the ole of immigants in the diffeent public sub-sectos. Ou investigation is based on the UK Labou Foce Suvey (LFS), a sample suvey of households living at pivate addesses in Geat Bitain/UK. We focus on the yeas , and we compae thee goups: natives, EEA immigants, non-eea immigants. We define immigants as individuals who ae accoding to the LFS bon outside the UK. We povide some of the basic headline statistics, which we discuss below, in Tables and Oveall Tends Public secto employment has steadily inceased in the UK since 1998, both in absolute tems and as a shae of total employment. While 22.8 pecent of all jobs wee in the public secto in 1998, this figue has inceased to 25.3 pecent by Ove the same peiod, immigants inceased thei shae in total employment fom about 7 pecent in 1995, to 13.3 pecent in 2010 (see Table 3.2.1). The oveall woking age population in the UK has inceased by 3.93 million individuals between 1995 and Most of this incease is due to immigants: while the native bon 3

4 population has inceased by 1.37 million (o by 4 pecent), the immigant population has inceased by 2.55 million (o by 82 pecent). The size of the EEA immigant population moe than doubled, fom 820,000 in 1994 to 1.75 million in The non-eea immigant population inceased by 71%, fom 2.24 to 3.83 million. Ove the same peiod, the total numbe of individuals in employment has inceased by 3.26 million individuals (o 13%), of whom 1.35 million ae natives, and 1.9 million immigants (see Table 3.2.1). The size of the public secto inceased by 1.1 million wokes by 2010, a 19% incease with espect to 1994 employment. The pivate secto gew by 2.1 million wokes, a 12% incease on elative to its size in 1994, the public secto has expanded by moe than the pivate secto. Immigation accounted fo 65% of the gowth in the woking age population, and fo 58% of the gowth in total employment. Howeve, it accounted fo only 29% of employment gowth in the public secto, but fo 77% of employment gowth in the pivate secto (see Table fo moe details). The aveage age of the native population has inceased by moe than one yea between 1994 and 2010, fom 39 to ove 40 yeas, while the aveage age of immigants has deceased fom 40 to less than 38 ove the same time peiod. This is pimaily due to the change in the composition of EEA immigants, whose aveage age deceased by moe than 6 yeas, fom 41 to 36. On the othe hand, the age stuctue of non- EEA immigants emained quite stable ove the peiod (see Table 3.3.1). The aveage yeas of education inceased between 1994 and 2010 fo both immigants and natives; howeve, the incease was highe among immigants, and due pimaily to a ponounced incease (ove two yeas) in the aveage yeas of schooling of EEA immigants. Public secto wokes have on aveage about one moe yea of education than pivate secto wokes, both fo natives and fo immigants. Wokes in the public secto ae also on aveage olde than wokes in the pivate secto (see Table 3.3.1). 4

5 With espect to the gende distibution, women ae substantially moe likely to wok in the public secto than men: the shae of women among public secto wokes is moe than 20 pecentage points highe than among pivate secto wokes fo both immigants and natives. When we beak down the public secto into the diffeent sub-sectos, we find that ove the peiod , the education secto employs about 32% of native public secto wokes and 29% of immigant public secto wokes. This compaes to 25.6 % of natives and 18% of immigants in public administation, and 27.6 % of natives and 40% of immigants in health and social wok. Thus, of those who wok in the public secto, immigants ae moe likely to wok in the health and social wok secto than natives, but less likely to wok in public administation, and in education. The concentation of non-eea immigants in the health secto has inceased ove time, fom 36% in the peiod 1994/1996 to 41% in the peiod 2008/2010, while EEA immigants have moved out of the health secto, fom 40% in 1994/1996 to 29% in 2008/2010, and into education, fom 27% in 1994/1996 to 37.5% in 2008/2010. Oveall, both EEA and non-eea immigants ae less epesented in public employment, elative to thei shae of the woking age population. When we beak down the public secto by occupations, we find that immigants have a highe elative shae in the highe skilled and highe paid occupations in the public secto. See Table fo moe details. Regional analysis In 2008/2010 non-eea immigants constitute 30% of the total woking age population in London, while EEA immigants make up anothe 10% of the woking age population. The coesponding shaes fo the whole of the UK ae 9.5% and 4%, espectively. The shae of EEA immigants among public secto wokes is lowe than thei shae in the total population 5

6 in all egions, while the shae of non-eea immigants among public secto wokes is highe than thei shae in the total population in thee egions. The elative concentation of non- EEA immigants in the public secto is paticulaly high in East Anglia. Acoss all egions, non-eea immigants ae least likely to be employed in the public secto in London, whee only 19.5% of them ae public secto employees, vesus 25% of natives and 13% of EEA immigants. Immigants and natives ae not equally distibuted acoss occupations in the public secto: on a national level, 10.6 pecent of immigants would have to change jobs to equalize thei occupational distibution to that of native public employees. The occupational dissimilaity of immigants and natives diffes consideably acoss egions: while fo instance in London, only 4.6% of non-eea immigants will have to change thei jobs to equalise thei occupational distibution to that of natives, this numbe inceases to moe than 23% in the Noth-East. Wages Aveage wages ae highe in the public than in the pivate secto. The aw public secto wage pemium has declined between 1994 and 2001, fom 24.6% to 16.3%, but inceases again aftewads, eaching 21% in Some of this gap is due to diffeences in the education and age stuctue between public- and pivate secto wokes, as mentioned above. When conditioning on education, gende, egion, and age, the gap educes to about 8-10 pecent. Contolling fo the occupational stuctue in pivate and public secto in addition educes the public pivate wage gap even futhe: it is lowest at 3% in Both EEA and non-eea immigants have an aw aveage wage advantage elative to natives in both the pivate and the public secto until the mid-2000s. Afte that, the elative 6

7 howeve, wage position fo EEA immigants deteioates, and becomes negative in the pivate secto. The gap fo non-eea immigants is instead stable ove time. Howeve, the eason fo this elatively favouable position of immigants is that they ae bette educated and moe expeienced than natives, and ae concentated in London. If we compae natives with immigants who have the same age, education, egional distibution, and gende composition, the wage gap tuns negative fo all yeas, indicating that immigants have a wage disadvantage elative to natives with the same chaacteistics. The diffeence is lagest fo non-eea immigants, and in the pivate secto. Both EEA and non-eea immigants ae moe likely to wok in the public secto in egions whee the public secto wage pemium is highe. Howeve, the faction of immigants among public secto employees is lowe in aeas with a highe public secto wage pemium. This might indicate that, when public secto wages ae highe, natives have moe incentives to wok in the public secto. It may also simply be a consequence of immigants settling in egions whee pivate secto wages ae high, elative to wages in the public secto. Indeed, when plotting the egional public secto wage pemium against a measue of the elative concentation of immigants in the public secto, we can not detect evidence of an association between the elative popotion of immigants in public employment, and the public secto wage pemium. Mobility ove the life cycle The faction of both EEA and non-eea immigants employed in the public secto is highe fo those who have been longe in the UK. The faction of EEA immigants in the public secto moe than doubles when compaing newly aived immigants to those who aived ten to twelve yeas ealie. The gowth in the shae of public secto employment is 7

8 lowe, but still positive, fo non-eea immigants: the shae of non-eea immigants in public secto doubles afte about 30 yeas of esidence. This howeve does not necessaily mean that immigants move into the public secto with time in the UK: It could also be due to immigants in the pivate secto leaving the UK at a highe ate. 8

9 1. Intoduction The Migation Advisoy Committee (MAC) has commissioned an independent eseach epot to addess The impact of migation on the povision of UK public sevices. The aim of the epot is to impove the existing evidence base on the impact of migation on the povision of UK public sevices, to conside how the cuent limitations to existing data in this aea can be ovecome, fo analysis of eithe the shot- o longe-tem impacts of migation. A key inteest of the MAC is on public secto sevices that ae povided by non- EEA immigants. The epot will whee possible daw distinctions between EEA and non-eea immigants, whee immigant status is defined based on county of bith. A futhe aim of the MAC is to use this epot to possibly monetise the impact of immigation (in paticula of immigation fom outside the EEA) on public sevices. Although such analysis is outside the scope of the epot, we will discuss the possibilities and the poblems and issues that aise when monetising the impact of immigation on public sevices in the Discussion section. It is impotant to spell out what is meant with public sevices. In ou pimay empiical analysis, we will use indiffeently public sevices o public secto as synonymous, and we will define an individual as being employed in the public secto if the individual is categoised as being employed in the public secto by the espective questions in the Bitish Labou Foce Suvey (LFS). The LFS defines the public secto as that owned, funded o un by cental o local govenment, and the pivate secto as eveything else, The categoization is ecoded as pat of the vaiable public which identifies public secto wokes as employees woking in Nationalised industies o state copoations; Cental Govenment o Civil Sevice; Local govenment o council (including police, fie sevices and local authoity contolled schools o colleges); Univesity o othe gant funded 9

10 educational establishment; health authoity o NHS tust; Amed foces; Othe non-pivate oganisations (except public companies plc and Chaities). It is impotant to note that two majo diffeences exist in the classification of jobs in the LFS compaed to that in the National Accounts: 1) all geneal pactitiones ae teated as pat of the pivate secto in the National Accounts wheeas the LFS ecods doctos in the NHS as public secto employees; 2) univesities / polytechnics / highe education colleges, gant maintained schools and FE and 6 th fom colleges ae classified as pivate in the National Accounts but as public in the LFS 1. Within the public secto, we futhe distinguish between fou main sub-sectos: health and social cae, education, public administation, and othe. Whee appopiate, we beak these down futhe. Please see Section 3 fo moe details. Immigants have been playing a vital pat in the povision of public sevices in the UK, and in paticula fo some key sevices, like the NHS, and the education system. Accoding to 2010 data fom the Geneal Medical Council, fo instance, 37% of egisteed medical doctos in the UK eceived thei education aboad (Geneal Medical Council 2011). The UK s high standad of univesity eseach is also impotantly detemined by the UK s ability to attact top eseaches fom aboad. Ove 10% of all UK academic staff ae non-eu nationals, and this popotion is even highe in the eseach-intensive Russell Goup univesities. 2 Little howeve is known about the pecise distibution of immigants fom EEA and non-eea counties in the public secto in the UK, and how this has changed ove time, whee they wok in the public secto, and how they compae to native bon wokes in tems of thei 1 Details can be found in the classification document of the LFS. 2 Pess elease fom Univesities UK Releases/Pages/UnivesitiesUKesponsetoHomeAffaisCommitteeepotonimmigationcap.aspx and witten evidence submitted by Russell Intenational Excellence Goup to the House of Commons Home Affais Committee: 10

11 education, wages, and othe chaacteistics. This epot will based on seconday data analysis, mainly dawing on the LFS povide a compehensive pictue of the ole immigants play in the public secto in the UK. This analysis addesses as best as possible - the key eseach questions the MAC has posed: 1) How can the existing liteatue help us to undestand the impacts of migation on the povision of UK public sevices? Is thee any potential fo analysing qualitative evidence, in combination with quantitative evidence, to conside the impact of migation on the povision of UK public sevices? 2) What does analysis of elevant data tell us about the impacts of migation, in paticula non-eea immigation, on the povision of UK public sevices, with focus on the skill level of public secto jobs and occupations filled by migants fom outside the EEA? Do immigants affect the quality and scope of public sevices in the UK? What would be the impact of having fewe non-eea migants employed in the sectos that povide these sevices? Is thee scope to fill employe demand with suitably skilled wokes fom the UK and wide EEA labou foce? Is it possible to diffeentiate between the contibutions that non-eea economic migants make to the povision of specific public sevices? Fo example, do non-eea migants make a geate contibution to the povision of state education than to publicly-funded health sevices? Is it possible to diffeentiate between the impacts of non-eea migation at a national, egional, and local level? If so, how do these impacts diffe? 3) What ae the implications of the above? How do migants contibutions to the povision of UK public sevices vay accoding to the duation of migants stay in the UK, and what ae the potential issues that need to be consideed in developing policy on tempoay, cicula and pemanent migation? What ae the implications of this impact of 11

12 migation fo the design and opeation of UK immigation policy, paticulaly fo Points Based System (PBS) migation? 4) What ae the limitations to analysis and how might we ovecome them? What ae the cuent limitations to evaluating the impact of migation on the povision of UK public sevices? What implications do these limitations have fo consideing this impact of migation fo the puposes of immigation policy design? What potential is thee to impove the measuement of this impact of migation? Ae data cuently being collected that will facilitate impoved analysis in this aea in futue? 12

13 2. Existing Liteatue and Conceptual Issues The key question we addess in this epot is the impact of immigation on the povision of public secto sevices. Although thee is quite a substantive body of eseach investigating the impact immigation has on the labou maket, both intenationally and fo the UK, fa less is known about the ole of immigation in keeping up the povision of public sevices. Moe ecently, effot has been made to highlight the ole played by the foeign bon in key sectos of the UK such as health and social cae. A epot by the House of Lods looking into the economic impact of immigation highlighted that thee could be a possible positive effect of immigation on the supply of public sevices owing to the numbe of immigants that ae employed in the secto (Authoity of the House of Lods 2008). Little is cuently known about the oveall extent to which immigants contibute towads the povision of public sevices though thei employment, in paticula when distinguishing immigants fom within the EU, and fom outside the EU. Public secto employment statistics ae published evey quate by the Office fo National Statistics (ONS) beginning in July 2005 (Matthews, 2010). Effots ae ongoing to impove these statistics. Cuently the ONS bulletin publishes tends in public secto employment and looks at vaious demogaphics and chaacteistics of those employed in the public secto using data fom QPSES (Quately Public Secto Employment Suvey) and the LFS (Matthews, 2010). Howeve, it does not look at the tend in the shae of the foeign bon employed in the public secto. The public secto in the UK compises of thee main sub-sectos o industies: health and social cae, education, and public administation. Of these thee, the liteatue mainly discusses the ole of immigants in the health and social cae secto which accounts fo the 13

14 lagest numbe of employed immigants in the UK since the yea 2002 (chapte 3, Ruhs and Andeson, 2010) 3. Vey little is known about thei ole in the aeas such as public administation and education. We will summaise some of the existing liteatue in Section 2.2. Futhe, to addess the questions set out at the beginning involves a numbe of conceptual issues, like fo instance What detemines individuals choices about which secto to wok in?, How ae wages set in the public and the pivate secto?, Does the diffeences in aveage wages between the public and the pivate secto tell us anything meaningful about whethe public secto wokes ae ove- o unde- paid?, and Why would immigants be helpful in addessing shotages in the public secto?. Section 2.1 will biefly talk about these issues, and povide a moe conceptual discussion about how we should think about the impact of immigants on the povision of public secto sevices. Section 2.2 will then biefly eview some papes that addess the impact of migation on the health secto, the social cae secto, and the education secto. 2.1 Wages, Wage Setting, and Employment in the Public and the Pivate Secto An impotant and elevant efeence fo this eseach is the liteatue on the choice of individuals whethe to wok in the public o pivate sectos. This liteatue stated in the 1970 s when economists became inteested in why individuals choose e.g. being a union membe o not, being a public o pivate secto woke, o being salaied o self employed. Economists undestood ealy on, fo example, that aveage wages of individuals who have chosen to wok in diffeent sectos ae not indicative fo the wage andomly assigned 3 See also the studies in Ruhs and Andeson (2010) fo an oveview of the ole of migation in filling shotages in seveal sectos. 14

15 individuals would ean in these sectos, as individuals sot into sectos based on thei own assessment of thei stengths and weaknesses. A key question was how to addess this poblem empiically, and it was Jim Heckman in a numbe of papes in the ealy 1970 s who suggested solutions, a contibution fo which he ultimately eceived the Nobel pize (see e.g. Heckman (1978)). Fo the public pivate secto choice, thee is a seies of papes that aims at undestanding (i) what dives the selection of individuals into these two sectos, and (ii) how can we compute the wages individual eceive in the two sectos, taking account of selection. The papes by Dustmann and Van Soest (1997a, 1997b) ae examples, and Dustmann and van Soest (1997a) give an account of this poblem moe fomally. The pape by Disney and Gosling (1998) is an ealy efeence that investigates public pivate secto choice fo the UK. The secto choice has been commonly analysed within a famewok that is known as the Roy model (Roy, 1951), which assumes that individuals possess skills along moe than one dimension, and that the etuns to this potfolio of skills diffes between the pivate and the public sectos. Thus, individuals who have elatively moe of the skill that is useful in the public secto will select into that secto while individuals who have moe of the skills that is useful in the pivate secto will select into that secto. The model is one whee individuals select into the secto whee they have a compaative advantage. Two issues ae addessed by this liteatue. Fist, the liteatue aims at undestanding the type of selection into the two sectos. Secondly, it aims at compaing wages in the two sectos. Hee the insight is that as individuals self select into the two sectos aveage wages in the two sectos can not be used to lean about what aveage individuals ean in the two sectos. Fo instance, assume that individuals in public secto jobs ae moe able, in the sense that even conditional on thei labou maket expeience and thei education they ae moe poductive than individuals in 15

16 pivate secto jobs. In that case compaing wages in the public secto with wages in the pivate secto would oveestimate the wage diffeential between the two sectos (assuming that the wage of an individual is equal to he maginal poduct), as it is lage than it was if individuals wee andomised into the two sectos. The models that ae estimated in this liteatue aim at assigning individuals to the two sectos as if they wee andomly assigned, and to e-cove the wage diffeential that would be obseved without self selection. The eliability and quality of these estimates depend on the paticula study and in paticula how well the eseache is able to identify the secto selection, in the sense that he finds vaiables that detemine secto choice, but ae not detemining wages, conditional on secto choice. What can be leaned fom this liteatue, and what is impotant fo the wok to be conducted hee, is that individuals who wok in the public and pivate sectos have chosen these sectos and ae not andomly assigned, so that compaisons of wages in the two sectos ae not eflecting wage diffeences that an aveage woke may expeience in the aveage pivate vs. public secto job. Anothe impotant aea of eseach elates to the wage setting in the public secto. Ehenbeg and Goldstein (1975) ae among the fist to discuss this issue. Suppose thee ae public and pivate secto jobs, and that wages ae set as the intesection of the demand- and supply cuve of labou. Suppose that the pivate secto is competitive, so that fo a given labou supply the wage equals its maginal poduct. How will wages be set in the public secto? Suppose fist that the demand fo labou in the public secto is detemined by a given demand fo public sevices, that public secto jobs ae identical to pivate secto jobs, and thee ae no maket fictions. Then thee will be an equilibium whee the wage ate in the public secto equals the wage ate in the pivate secto, and the labou maket will clea. In this simple economy, changes in the demand fo the pivately poduced good, o the publicly 16

17 poduced good will not change the wage in both sectos, as wokes will switch sectos to eliminate any wage diffeentials. Now assume that public and pivate secto jobs ae slightly diffeent, and wokes diffe in thei innate skills, which ae multidimensional. Then wages in the two sectos do not need to be equal, and wokes will select into the two sectos so as to ealise thei compaative advantage as implied by the Roy model which we have discussed above. Now assume again that public and pivate secto jobs ae identical, but that thee ae labou maket impefections. These can take vaious foms. Fo instance, poweful public secto unions may negotiate wages above the maket cleaing ate. In that case, thee will be an excess demand fo public secto jobs, and this can then lead to queues fo public secto jobs. This is the situation in many developing counties with moe people wishing to wok in public secto jobs than thee ae positions. On the othe hand, it may also be that the wages in the public secto ae below the maket cleaing ate. This situation may occu when the govenment is equied to povide a cetain amount of sevices, but is not willing (o able) to pay sufficiently high wages fo public secto positions so that pivate secto jobs become moe attactive. Some ague that this situation chaacteised the UK in the ealy-mid 1990 s, in paticula in the health- and education sectos. What can be done in this situation? One possibility is to adjust wages so that demand and supply will equalise. This equies the willingness of the govenment (and ultimately the electoate) to pay enough fo public sevices so that the labou maket in the public secto cleas. Anothe possibility is to educe the poduction of public sevices, and thus shift the demand cuve downwads something that we may expeience cuently. A final possibility which is elevant fo the wok in this epot is to employ wokes who ae willing to wok fo wages that ae lowe than wages in the pivate secto. 17

18 Who ae these wokes? Immigants ae one categoy of wokes who is often thought to be filling position in the labou maket which ae not desiable to native wokes. But why should they take up positions that seem not attactive to native wokes? Thee ae (at least) two easons why immigants could be willing to wok in the public secto although natives would pefe a highe paid pivate secto job. Fist, thee may be enty baies fo pivate secto jobs, o immigants may be foced to emain in the public secto. Note that in this situation, immigants ae still likely to be bette off woking in the public secto than thei altenative option (woking in thei home county), as the public secto job may still be bette paid than the altenative job in thei home county. If this was not the case, the individual would not have decided to emigate, and to take the job in the fist place. This is diffeent fom natives, whose altenative is the pivate secto. This is even moe so if immigants intend to emain only tempoaily, so that they spend much of thei eanings back home enjoying almost cetainly a highe puchasing powe. Thus, immigants will delibeately choose to wok in public secto jobs in the immigation county than emain in thei oigin county. This is not the case fo natives, who will be made wose off when they ae foced into the public secto. Of couse, when emoving the enty baie to pivate secto jobs, immigants will almost cetainly move to the pivate secto. This suggests that the impotance of immigants fo povision of public secto sevices is much elated to the wage setting in the public secto, and the willingness to pay fo public secto sevices. Secondly, pivate and public secto jobs may diffe, and immigants may be selected (though e.g. immigation legislation, o point based systems) so that they have a compaative advantage in the public secto. Fo instance, when hiing tained nuses, these individuals will most likely be bette off in a nusing job than in anothe job outside the cae sevices in the 18

19 pivate secto, as thei skills ae likely to give them a compaative advantage in the nusing secto. Thee ae some dynamic aspects to these consideations. If public and pivate secto jobs ae diffeent, with diffeent skill equiements, then non-competitive wages in the public secto may lead natives not to seek education in these jobs fo instance, in nusing o the teaching pofession. In this case, the govenment will have to ely on immigants fo these jobs at least in the shot un, as the poduction of these skills (though the national education system) will take some time even if wages ae adjusted. Howeve, whethe young natives will eact to impoved wages by choosing that paticula pofession and study fo it depends on whethe they believe that an impovement in wages will be moe pemanent o not. Fo instance, assume thee is a pesistent shotage of native wokes in say the nusing pofession, the eason being that wages (set by the govenment) in this secto ae lowe than attainable wages in pivate secto occupations that equie the same length of education. Now assume the govenment incease wages fo nusing pofessions. Whethe o not individuals will eact to these inceases by choosing education in nusing depends on how cedibly the govenment can convey that these impovements ae pemanent. This discussion is useful fo ou analysis below, and we will come back to it when we pesent and discuss ou esults. 2.2 Immigation and the health, cae and education sectos The health secto Accoding to an aticle published by the ONS (Matthews, 2010), the sevice that witnessed the lagest incease in the public secto duing this peiod was the NHS. Duing the peiod a majo intenational ecuitment dive was caied out as a esponse to the need fo additional staffing fo the UK s health secto (Buchan et al., 2006). In 2005, about 19

20 62% of the medical staff at that time in the NHS was UK tained, while 6% wee fom within the EEA and the emaining 32% fom outside the EEA (Buchan, et al., 2006). Since the NHS is publicly funded thee is consideable scope fo govenment intevention. The expansion in the NHS wokfoce came to a halt when funding shotages sufaced afte which the focus was shifted to inceasing poductivity of the existing wokfoce. This intenational ecuitment dive of health pofessionals did not only happen in the UK but also in counties such as the US and Canada. In the ealy 1980 s, 86% of all migant physicians wee found in just five counties: Austalia, Canada, Gemany, UK and the US (Bach, 2006). As a esult, bain dain and a decline in the quality of health cae in counties fom whee health pofessionals wee ecuited fom aboad became an impotant issue, and stated to affect ecuitment policies. In esponse to these concens, counties such as the UK developed policies that efained fom ecuiting fom souce counties facing a shotage of health pofessionals (Buchan, et al. 2006). The immigation of nuses has been documented in geat detail, and has been the subject of seveal eseach papes (see e.g. Kalist et al., 2010 and Ross et al., 2005). Thee is plenty of eseach on the impact on host counties such as US and Canada as well as the common souce counties like the Philippines and India. In esponse to the inceased demand in the developed wold fo nuses fo its health secto, the govenment of the Philippines established taining schools fo the nuses especially tageted at those who intend to emigate (Bach, 2007). Unlike the ecuitment of doctos, the emigation of nuses is widely believed to have been a souce of foeign exchange though emittances and gain in expetise by etuning immigants fo counties like India (Liese et al., 2003). 20

21 The social cae secto Apat fom the health secto, thee ae a numbe of studies on the effect on host counties due to the in-migation of skilled labou fo the social cae secto. Fo instance, fo the UK, the liteatue has looked at the difficulties faced by employes of social cae to ecuit migant labou afte the changes that wee made to the wok pemit system in (Cangiano et al., 2009). Unlike health pofessionals who wee ecuited as pat of a pogamme, as explained above, the social cae secto in the UK has not seen any systematic ecuitment of migant labou, accoding to Spence et al. (2010). They point out that this is supising, given that counties like Canada, the UK, Austalia and Ieland have ageing populations which ae pojected to apidly incease in the next twenty yeas. In the UK, the biggest influx of immigants into this secto took place following the expansion of the EU to include the A8 counties, with the main souce county being Poland (Hussein et al., 2011). Education Anothe aea within the public secto that has seen an influx of immigant labou in the developed wold is education. The emphasis in the liteatue has mostly been on student migation (see e.g. Dustmann and Glitz, 2011) and less on the supply of teaches o educationists fom within the pool of migants. Whee liteatue does addess migation of education wokes it does so fom the pespective of the souce county. Discussion on the bain dain effect is often found, as a esult of the flight of highly skilled individuals who look to benefit fom the povision of highly skilled migant visas fo counties such as the United Kingdom (Temblay, 2005). Moe ecent point-based systems implemented by counties such as Austalia and Canada ae cited as easons fo the wosening of the situation 21

22 fo counties like Poland, Ukaine, Hungay, etc. Pofessionals such as scientists and pofessos leave thei counties fo bette emuneation and seldom eve etun (Vizi, 1993). Some counties like China and India have implemented policies to encouage oveseas esidents to etun o to invest in thei home counties. Temblay (2005) agues that this has led to gowth in the technological industies in these counties whee migants etun with impoved skill and knowledge of the developed wold, o though the incease in emittances that povide valuable foeign exchange and contibute to development. 22

23 3. Analysis 3.1 Data Souces: the UK LFS We will addess the questions set out by the MAC in its eseach specification pimaily though analysis of seconday data souces. The main dataset that we will use in ou analysis will be the UK Labou Foce Suvey (LFS). The LFS is a sample suvey of households living at pivate addesses in the UK. Its pupose is to povide infomation on the UK labou maket that can then be used to develop, manage, evaluate and epot on labou maket policies. It is conducted by the Office fo National Statistics. Othe than the Census, the LFS is the only compehensive souce of infomation about all aspects of the labou maket. As fom 1992 (Decembe 1994 in Nothen Ieland) the LFS data ae collected and published quately. Between 1984 and 1991 the suvey was caied out yealy. Between 1973 and 1983 it was caied out biannually. The 1973 data ae not publicly available. Since 1992 the sample size is about 60,000 households in the UK in evey quate, epesenting about 0.2% of the population. The LFS collects infomation on espondents' pesonal cicumstances (including ethnicity, nationality, county of bith, and yea of aival in the UK if applicable) and thei labou maket status duing a efeence peiod of one to fou weeks immediately pio to the inteview. The LFS is a otating panel dataset: individuals ae inteviewed fo five consecutive quates and then leave the sample. In evey quate, one fifth of the sample is inteviewed fo the fist time, one fifth fo the second time, and so on. Individuals ae asked about thei wage in thei fist and fifth inteview only. The LFS is the lagest and longest-standing nationally epesentative continuous suvey available in the UK. It is theefoe paticulaly useful not only because of the ich amount of available vaiables, but also because it allows intetempoal compaison. Howeve, the LFS 23

24 has not been especially designed fo the study of immigation. Theefoe, the numbe of sampled immigants is elatively small, as it eflects the popotion of immigants in total population. This might limit the extent to which some occupational o sectoal beakdowns ae possible. The LFS also contains population weights, which account fo diffeential nonesponse acoss the sample population, and allow poducing tables giving population estimates. Howeve, the constuction of population weights does not take into account the nationality o county of bith of individuals. This theefoe may limit the extent to which the LFS can be used to povide estimates of the size of the immigant population. In ou analysis we will use the LFS fo yeas , pooling togethe all quates within each yea to incease the sample size, and focusing in paticula on most ecent yeas. We define immigants as foeign bon thoughout the analysis, and we will always compae thee goups, based on individuals county of bith: natives, EEA immigants, non-eea immigants. We focus on the woking age (16-65) population only. Sectos 3.2 Employment of Natives and Immigants in the Public and Pivate Figue epots the evolution of total employment in the UK (scatteed line) between 1994 and 2010, and it also shows the evolution of native employment (ed solid line), and on a diffeent scale on the ight axis the evolution of immigant employment (blue solid line). The total numbe of jobs in the UK has inceased between 1994 and 2006, but it has then slightly declined between 2006 and At the same time, howeve, immigants employment has constantly inceased, and emained constant in the most ecent yeas. [Figue 3.2.1] 24

25 Public secto employment has steadily inceased since 1998, both in absolute tems and as a shae of total employment, as we show in Figue While fo instance 22.8 pecent of all jobs wee in the public secto in 1998, this figue has inceased to 25.3 pecent by [Figue 3.2.2] Ove the same peiod the immigant population has also shaply inceased, and immigants inceased thei shae of total employment fom about 7 pecent in 1995, to 13.3 pecent in 2010 (see Figue 3.2.3). [Figue 3.2.3] In Table we epot in moe detail the changes in the size and stuctue of employment between 1994 and The enties in the Table efe to the woking age population, which we define to be all individuals in the UK between 16 and 65. [Table 3.2.1] The fist inteesting obsevation in that Table is that the woking age population in the UK has inceased by 3.91 million individuals. This incease has been mainly diven by immigation: while the native bon population has inceased by 1.38 million (o 4 pecent), the immigant population has inceased by 2.56 million individuals (o by 82 pecent). Futhe, the total numbe of individuals in employment has inceased by 3.26 million individuals (o 13 pecent), of which 1.35 million ae natives, and 1.9 million ae immigants. Thus, moe of the additional employment elationships go to immigants than natives - about 58%. Howeve, that is not at all supising, as immigants ae mainly esponsible fo population gowth in the woking age population: 65% of woking-age population gowth has been due to immigation. Thus, the statement that the majoity of new jobs has gone to immigants is coect but not supising, as immigants constituted the main pat of population gowth. 25

26 Employment gowth ove the peiod was elatively highe in the public secto than in the pivate secto. The size of the public secto inceased by 1.1 million wokes by 2010, a 19% incease with espect to 1994 employment. In contast, employment in the pivate secto gew by 2.1 million wokes, which is a 12% incease on Thus, elative to its size in 1994, the public secto has expanded by moe than the pivate secto which is exactly what Figue illustates. What ole did immigation have in these changes? The population of woking age immigants inceased by 2.56 million ove this peiod, and the incease was consideably faste among immigants fom EEA counties. The size of the EEA immigant population moe than doubled, fom 820,000 in 1994 to 1.75 million in 2010, while non-eea immigants inceased by 71%, fom 2.24 to 3.83 million. Thus, although EEA immigation inceased faste, non-eea immigants constitute still the vast majoity of immigants in the UK. The bottom panel of the table decomposes gowth in woking age population and in employment in each secto between natives and immigants. Immigation accounted fo 65% of the gowth in woking age population, and fo 58% of the gowth in total employment. Howeve, immigants account fo only 29% of employment gowth in the public secto, but fo 77% of employment gowth in the pivate secto. Theefoe immigants employment has played a lage ole in the gowth of pivate secto athe in public secto employment. 3.3 Immigants chaacteistics We epot summay chaacteistics of the native and immigant population in 1994 and 2010 in Table [Table 3.3.1] 26

27 The top Panel of the Table efes to the whole woking age population, the second panel epots chaacteistics of pivate secto wokes, and the thid panel of public secto wokes. The aveage age of the native population has inceased by ove one yea between 1994 and 2010, fom 39 to ove 40 yeas, while the aveage age of immigants has deceased fom 40 to less than 38 yeas ove the same time peiod. The decease in aveage immigants age is pimaily due to the lage dop in EEA immigants aveage age, which has deceased by ove 6 yeas, fom 42 to 36. In contast, aveage non-eea immigants age has emained quite stable. The shae of women is highe among the immigant woking population than among natives in both yeas, although it has deceased fo both EEA and non-eea immigants ove time, while emaining stable fo natives. The last column of the table epots the aveage age at which individuals left full time education. While changes in this vaiable between immigants and natives may be affected by diffeences in school stating ages acoss counties and in the duation of school cuicula, this is the best available souce of infomation on immigants education in the UK LFS. The UK LFS, in fact, ecods all foeign educational qualifications as othe qualifications and the compaison of qualification levels between immigants and natives is theefoe poblematic. 4 The aveage yeas of education inceased ove time fo both immigants and natives, but the incease is highe among immigants, and due pimaily to a ponounced incease (ove two yeas) in the aveage yeas of schooling of EEA immigants. The two bottom panels of Table show that thee ae substantial diffeences between pivate and public secto wokes, both among immigants and natives. Wokes in the public secto ae on aveage olde than wokes in the pivate secto: in 2010 the aveage native public secto employee is moe than two and a half yeas olde than the aveage native pivate secto employee, and the gap is even highe, at ove thee and a half yeas, among 4 See the Appendix of Manacoda et al. (2011) fo a discussion of this issue. 27

28 immigants, and paticulaly lage (almost six yeas) fo EEA immigants. Women ae substantially moe likely to wok in the public secto than men: the shae of women among public secto wokes is ove 20 pecentage points highe than among pivate secto wokes fo both immigants and natives. Finally, public secto wokes have on aveage about one moe yea of education than pivate secto wokes, and this is tue both fo natives and fo immigants. We illustate this in Figue 3.3.1, whee we epot the evolution ove time of the mean age at which individuals left full time education fo natives, EEA and non-eea immigants, sepaately in the pivate and public secto. [Figue 3.3.1] The figue shows clealy that wokes in the public secto have a highe aveage education than wokes fom the same oigin county in the pivate secto, and that thee is a stong upwad sloping tend ove time in both sectos fo the aveage yeas of education of both immigants and natives. While in most yeas the aveage education of non-eea immigants is highe than fo EEA immigants, the latte have a faste gowth ove time, and by the end of the 2000s they have eached, and ovecome, the aveage education of non-eea wokes in both sectos. 3.4 Occupational and sectoal distibution Whee within the public secto ae immigants moe concentated, and does thei sectoal distibution diffe fom that of natives? Figue and the left panel of Table show the distibution of immigants and natives acoss sectos within public employment. We distinguish between the thee majo subsectos whee public employment is concentated in 28

29 the UK (public administation, education, health and social wok 5 ), and pool all othe sectos in the esidual categoy Othe, fo the yeas 1994/1996 and fo the yeas 2008/2010. [Figue 3.4.1] In 2008/2010 education which includes all educational institutions fom pe-pimay to highe education - is the most common secto fo native public employees, as it employs about one thid (32%) of native public wokes. Convesely, 29% of immigants in the public secto wok in education while 38% ae employed in the health secto. Howeve, thee is a lage heteogeneity acoss immigant goups: education is the most fequent secto of employment fo EEA but not fo non-eea immigants (ove 37% vesus 26%), while health is the most fequent secto fo non-eea immigants (41% of total non-eea public employees and 29% of EEA public employees). The concentation of non-eea immigants in the health secto has inceased ove time, fom 36% in 1994/1996 to 41% in 2008/2009. Convesely, EEA immigants have moved out of the health secto ove time: 40% of EEA public employees wee woking in the health secto in 1994/1996, but this shae has deceased to 29% in 2008/09. This is inteesting, and could be explained by the change in the composition of EEA immigants. The ight panel of Table shows the shae of EEA and non-eea immigants out of total public employees in each secto in the two peiods. [Table 3.4.1] While in 2008/2010 non-eea immigants epesent 11.2% of public employees in the health secto, they make up only 9.6% of the total woking age population. Convesely, EEA 5 We define these sectos based on the Standad Industial Classification (SIC) adopted in the LFS. Until 2008 sectos in the LFS wee classified using the SIC 92 classification, while since 2009 the LFS has adopted SIC2007. Specifically, we define categoies as follows. Public administation: SIC92 Section L, SIC2007 Section O Public administation and defence; compulsoy social secuity. Education: SIC92 Section M, SIC2007 Section P Education. Health and social wok: SIC92 Section N, SIC2007 Section Q Health and social wok. 29

30 immigants account fo only 3% of health secto employees, but constitute moe than 4% of the total woking age population. Both immigant goups ae unde-epesented in all othe sectos of public employment, elative to thei shae on the woking age population. In Table we epot the distibution of native bon individuals and of EEA and non-eea immigants in the public secto acoss majo occupations goups (1 digit SOC 2000 classification). The thee leftmost columns epot the distibution, pooling yeas , while the thee ightmost columns efe to yeas pooled. The last column epots the aveage public secto houly pay by occupation, expessed in 2005 GBP, computed ove the yeas 2001/2010 pooled. [Table hee] Immigants tend to be moe concentated than natives in the highest skilled and most highly paid occupations, but the diffeence is educing ove time. Ove the peiod % of natives in the public secto ae employed in the thee highest anked occupations, up fom 51.5% in yeas Convesely the shae of EEA (non-eea) immigants in the same occupation goups is 62% (64%) in pooled, while it was 64% (63%) ove the peiod To what extent ae diffeences in the occupational distibution of immigants and natives due to immigants and natives woking in diffeent sub-sectos? We exploe this in Table whee we epot the occupational distibution of native and immigant public employees within the public administation, education and health and social wok secto, whee we pool again the yeas 2008/2010. [Table 3.4.3] 6 We cannot go futhe back in time because befoe 2001 occupations wee classified using the SOC90 classification, and thee is no exact coespondence between SOC90 and SOC2000 at any level. 30

31 The occupational distibution of immigants and natives within the public administation (fist panel of the Table) is vey simila, although immigants tend to be less concentated in the top occupations and moe concentated in the bottom occupation categoies. In the education secto, instead, immigants ae moe concentated than natives in pofessional occupations: 60% of EEA immigants and 54% of non-eea immigants in the education secto ae employed in pofessional occupations, vesus 50% of natives. It is in the health secto, howeve, that the occupational distibution of immigants and natives is damatically diffeent: the shae of immigants in pofessional occupations is, fo both EEA and non-eea immigants, about twice as high as the shae of natives. Convesely, natives ae twice as concentated as non-eea immigants, and 50% moe concentated as EEA immigants, among manages and senio officials. 31

32 3.5 Regional analysis We investigate egional diffeences in the ole of immigants in public employment in Table 3.5.1, whee we focus on the pooled yeas 2008/2010 (we epot the coesponding table fo yeas 1994/96 in Table A1 in the Tables Appendix). We define egions based on the LFS vaiable uemsc, which epots individuals county of usual esidence. We have gouped some egions togethe to incease the sample size 7. Ou final egional vaiable compises of 12 egions: Noth East, Yokshie and the Humbe, East Midlands, East Anglia, Geate London, South East, South West, West Midlands, Noth West, Wales, Scotland and Nothen Ieland. [Table 3.5.1] The fist two columns of the table epot the shae of non-eea and EEA immigants in the total egional woking age population. London is the egion with the highest concentation of immigants fom all oigins: non-eea immigants constitute 30% of the total population in London, while EEA immigants make up anothe 10% of the population. The coesponding shaes fo the whole of the UK ae 9.5% and 4%, espectively. In all othe egions except fo London, the shae of immigants is below the national aveage, with the West Midlands, the South East and the East Midlands having highe shaes of non-eea immigants (9.5%, 8.6% and 6% espectively) than othe egions, and East Anglia, the South East and Nothen Ieland having shaes of EEA immigants that ae highe than in emaining egions at 4.7%, 4.2% and 4.2% espectively. Columns 3 and 4 epot fo each egion the shae of immigants among all public employees. It is instuctive to look at these columns in compaison to columns 1 and 2. In egions whee the shae epoted in column 3(4) is highe 7 We pool togethe Tyne & Wea and the Rest of Nothen Region; South Yokshie, West Yokshie and Rest of Yokshie and the Humbe; Inne and Oute London; West Midlands (Metopolitan) and the Rest of West Midlands; Geate Mancheste, Meseyside, and the Rest of Noth West; Stathclyde and the Rest of Scotland. 32