Thursday, 16 January 2014

How Early Estimates for Migration Flows after EU Enlargement in 2004 are Misinterpreted

by Christian Dustmann and Ian Preston

Department of Economics and Centre for Research of Analysis and Migration (CReAM) at University College London

Introduction and Summary

It has become part of recent conventional political wisdom that immigration to the UK from the eight countries acceding to the EU in May 2004 (A8 countries) was dramatically underestimated.  Certain characterisations of the extent of this underestimation are very large.  For example, then Conservative shadow minister,  Lord Howell of Guildford, described predictions in 2005 as being "Laughably, ... out by about 2,200%” [http://www.publications.parliament.uk/pa/ld200506/ldhansrd/vo051220/text/51220-20.htm] whereas then Liberal Democrat spokesman, Chris Huhne, claimed in 2008 that the "breathtaking" scale of the misprediction was 1,373% [http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080424/debtext/80424-0016.htm]. More recently, Jack Straw, Foreign Secretary at the time of accession, has said that “The predictions were completely catastrophic. I mean they were wrong by a factor of 10,” and offered a number for annual net migration of “something like 130,000” [http://www.bbc.co.uk/programmes/b03phwk5].  Outside of party politics, a recent report by Civitas [http://www.civitas.org.uk/press/PRimmigration.html], for example, draws attention to the supposedly large deviation between forecast and outcome to cast doubt on other research.

By contrast, one of the authors of this note has claimed that the figures were “not very far off” [http://www.bbc.co.uk/news/uk-politics-21682810].  The discrepancy between such a judgment and some of the comments above may seem difficult to understand but becomes more intelligible if attention is paid to what the predictions were for and the policy regime to which they were meant to apply.  Poor understanding of the predictions and their policy context is unhelpful to a balanced debate on associated issues and this brief historical note is intended to clarify their basis.

There are three types of error. The first two are elementary definitional errors:
  • Some have confused annual figures with those which are cumulative over 9/10 years.
  • Some have confused gross numbers (i.e. those coming to the UK) with net numbers (i.e. the difference between those coming to the UK and those leaving the UK for elsewhere). 

The third type of error is to ignore the difference between the context to which the predictions were supposed to apply and the reality of the context in which actual post-accession flows occurred. The Home Office commissioned a report with forecasts for the case in which other EU member states, and particularly Germany, would also, like the UK, permit labour migration from the A8 countries.  In the event, all other EU member states except Ireland and Sweden put controls on labour migration in place.  No forecasts were commissioned or calculated for such a case.  Nonetheless the report recognises the importance of the issue and offers some speculative observations pointing out that migration to the UK would be substantially higher if other EU countries put controls in place.

Below we explain in more detail the common misinterpretations of the projections which together explain the extent to which the under-prediction is frequently exaggerated.

The 2003 Report and Subsequent Migration

The numbers usually quoted originate in a report [http://www.ucl.ac.uk/~uctpb21/reports/HomeOffice25_03.pdf] written at the Centre for Research and Analysis of Migration (CReAM) [http://www.cream-migration.org].  The report contained predictions for net migration inflows from A8 accession countries to both the UK and Germany under a variety of scenarios.  In particular, two scenarios presented for the UK gave predicted net inflows of 5,000 and 13,000 per year, averaged over a ten year period. The assumption underlying the central cases discussed was that other large countries in the EU (in particular Germany) would also open up their labour markets to A8 immigrants in May 2004. The report emphasised the weaknesses inherent in any attempt to predict immigration from A8 countries in the absence of historical migrations from these countries upon which predictions could be based. The forecasts were based on historic migration flows from other countries and the resulting numbers described as needing to be treated with “great caution” since the assumption of similarity between flows from these countries and A8 countries was highly unreliable.

Estimates from the Office of National Statistics suggest that the actual net inflow over the nine years from 2004-2012 was 423,000 (Office of National Statistics: “Migration Statistics Quarterly Report”, November 2013). This corresponds to an actual outturn of about 50,000 per year. Comparison between the 2001 Census and 2011 suggests that the rate of arrival may have been substantially higher (although such a comparison also covers year prior to the 2004 enlargement) [http://www.ons.gov.uk/ons/guide-method/method-quality/specific/population-and-migration/population-statistics-research-unit--psru-/methods-used-to-revise-the-national-population-estimates-for-mid-2002-to-mid-2010.pdf].

Errors in Comparison

The following are the most common errors in drawing comparisons involving these and other figures.

Firstly, there are errors in interpreting what the forecasts were for. Some commentators seem not to distinguish between a predicted annual rate of inflow averaged over ten years and inflows for particular years or, worse, the cumulated flow of immigrants over many years.  This can lead to particularly lurid comparisons.

Secondly, another error is to fail to distinguish between net and gross migration flows. Gross migration is the total number of individuals entering the country. Net migration is the difference between the number entering and the number leaving. Return migration by earlier immigrants can mean that the numbers differ substantially. The numbers in the report referred to net migration flows.  In the case of migration from A8 countries, gross migration between 2004 and 2011 has been estimated as 713,000 (Office of National Statistics: “Migration Statistics Quarterly Report”, November 2013), or about 80,000 individuals per year, a number higher by about two thirds than net migration.  Again, failing to make this distinction tends to an exaggeration of the underprediction.

Finally, a different sort of error is to fail to appreciate the difference between the policy context of the estimates in the report and that of the final outcomes.  The report was prepared in early 2003 and its forecasts assume that labour markets of other European countries would also be open: as noted, migration flows to these other European countries were discussed in the report, and estimates for one of them, specifically Germany, also calculated.  The report draws attention to possible sensitivity to adoption of transitional arrangements restricting access to labour markets in those other countries. The estimated average net yearly inflows to Germany (geographically and, arguably, culturally closer to the A8 countries than the UK) under various scenarios were between 20,000 and 210,000.  In the event that Germany should impose a transitional arrangement closing its labour market, the report suggested that up to a third of these might come to the UK instead (and others to other closer countries) – although this was a speculative observation rather than an estimate, this is compatible with an additional flow diverted from Germany alone of anywhere between 7,000 and 70,000.  In fact, not only did Germany impose the longest legally possible transitional restrictions but the UK was alone with Sweden and Ireland in allowing immediate access.  Allowing for diverted migration flows not only from Germany but also from other countries which closed their labour markets, the range of possible inflows suggested in the report comes to encompass values of the order of magnitude that actually arose.  Institutional arrangements under which A8 migrants have equal access to the labour markets of all EU partners have in fact held only since 2011.

Conclusion

The frequent suggestion that the forecasts were misleading by orders of magnitude is not supported by close reading of the report, which is explicit on

  • providing numbers on average annual net inflows covering a period of ten years, rather than cumulated (gross) inflows of immigrants over several years
  • providing numbers applicable to a policy regime in which other large EU countries open their labour markets alongside the UK – a regime that did not materialise 

The range of tentative suggestions the report provides on possible annual net migration inflows if Germany – the largest potential immigration country for A8 immigrants – should not allow for free movement of labour includes numbers comparable with the actual annual net immigration from A8 countries based on ONS figures for the period 2004 to 2012.

References:

Dustmann, C., Casanova, M., Fertig, M., Preston, I. and Schmidt, C.M. (2003) The impact of EU enlargement on migration flows. (Home Office Online Report 25/03 ).

Office of National Statistics: “Migration Statistics Quarterly Report”, November 2013

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