Highly educated immigrants boost economy – Analysis

The inward migration of foreign experts, including university teachers and researchers, is good business for Denmark regardless if they are coming from India, China or Germany, according to a new analysis of Danish registry statistics – among the most complete in the world.

Highly educated foreigners working in Denmark in the decade 2003-13 are found to have contributed positively to the Danish economy.

Whether they are bringing their accompanying families, receiving Danish welfare provisions like visiting doctors and hospitals, receiving Danish student financing or SU, or having children in Danish schools or kindergartens, there is a surplus income for the Treasury, even when including in the cost benefit analysis the possibility that guest researchers in Denmark might receive a tax rebate.

The analysis was published by the think tank DEA on behalf of the Confederation of Danish Industry, which represents 10,000 companies.

The context of the analysis is that great challenges lie ahead for Danish industry in the coming years, with slow economic growth and pressure on public finances, combined with demographic changes when the post-war generation goes into retirement.

Recruitment of a highly skilled workforce is a priority for the Danish confederation, and there is an ongoing debate in Denmark – as in other countries, including the United Kingdom, currently – about whether the recruitment of foreigners to the workforce is a profit or loss for the country.

The focus of the present analysis is to examine how highly educated people are contributing to the Danish economy, by cross examining Danish statistical registries combined with two case studies of typical highly educated immigrant workers.

The analysis was presented at the conference, “Global Talent Summit”, in Copenhagen on 17 November with the participation of Danish and foreign industrialists.

In the decade from 2003 to 2013, a total of 7,439 highly educated immigrant workers were identified in the Danish registries, 74% coming from Western countries. Three-quarters came from the 10 major sending countries. The largest nations represented were Germany (19%), the UK (10%), Italy (8%), and Sweden and the United States (both 7%).

Some 1,950 immigrants came from non-Western countries, with 71% of them coming from the 10 largest sending countries, including China (23%), India (17%), Russia (7%), Iran (6%) and Japan (5%).

Danish registries do not contain the data on immigrant workers’ higher education, so the population to be included in the study was identified by cross-examining several registries covering 10 job sectors where highly educated people traditionally work.

These sectors were: teaching and research at universities, working with building architecture, medical doctors, geologists and geophysical work, chemical engineering, artistic work including music and song, pharmacy, analytical work with leadership and management, financing and insurance and working with biochemistry.

Examining the average tax income of these immigrant experts, the average income of non-Western experts was DKK156,000 (US$22,500) and for experts from Western countries DKK175,487 (US$25,300), while Danish average salaries were DKK140,983.

Accompanying spouses of Western country experts were earning significantly more than spouses from non-Western countries, more than double as much per year (DKK149,000 vs DKK70, 000), which suggests that in the case of many of the couples coming from Western countries, both are highly educated.

When cross checking against all Danish social welfare expenses received during the stay of the foreign experts, even when bringing their families, they are receiving significantly lower social welfare provisions than the Danish population at large, on average DKK11,311 for highly educated foreign citizens compared to DKK20,626 for Danish citizens.

The average stay of a foreign expert in this study was five and a half years, for the whole group, while those bringing their families on average stayed for 10 years. Immigrants from Western countries without their families stayed on average a half year less, and one year less when bringing their families, compared with non-Western experts.

Positive contribution

The report shows that highly educated people make an extremely positive contribution to public financing and constitute a solid income for the Treasury, with regard to both Western and non-Western highly educated immigrant workers.

The net-profit on average is approximately DKK130,000 per year for those not bringing their families, bringing in on average DKK720,000 during their stay, compared to DKK220,000 per year for those bringing their families, corresponding to DKK2.2 million for the 10-year period.

If the foreign expert’s spouse had a job during their stay, 81% of immigrant experts stayed in Denmark five years after arriving, compared to 68% if the spouse did not work.

Immigrant researchers in Denmark were staying on average three and half years, bringing in more net profit to the Treasury in spite of enjoying reduced taxation, mainly due to having higher salary levels compared to the population of immigrant workers at large.

Last year another study found that, while there had been increasing public fears that recruitment of international students would increase the cost of funding public higher education, in fact they contributed US$24 million to the economy in the 12 years to 2008, even after deducting the costs it took to educate them in Denmark.