Arnold Kling  

The Immigration Indicator

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Henrik Rasmussen writes,

estimates of Danes living in London vary between 35,000 and 70,000, which is roughly 1% of the total Danish population of 5.4 million. According to the leading Copenhagen business daily Børsen, the average income of these Danish Londoners is more than $100,000 per year.

Rasmussen uses this statistic, along with others, to debunk the notion that the Danish welfare state is a successful model.

However you feel about immigration (or foreign-born workers), I think that the desires of workers are a useful indicator of relative economic opportunity. I would much rather be in the country with workers teeming to get in than the country with workers teeming to get out.

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COMMENTS (12 to date)
Michael Sullivan writes:

I'm okay with your immigration indicator as a first order approximation, but I will note that the US is less of a draw for the high skilled than it was a few years ago. Another wrinkle is that a large first class economic city is a big draw for ambitious folks, even if the average economic situation of a UKer were weaker than the average situation of a Dane (I'm not claiming it is).

I'm not okay with comparing the incomes of Danes in London with Danes overall or even Danes in Copenhagen as evidence that things are better in England than in Denmark. Immigrants are self-selected often for economic opportunity and ambition. I'm guessing that the income of UK citizens in Denmark is probably higher than the income of the average Brit, and I'll bet that will be true for just about every country and every destination country where the two are comparable in GDP per head.

I hear they pay westerners pretty well in Shanghai if they have the right skills. That doesn't mean that China is better off or has better economic policies than, say, the UK.

In this particular case, London is a world financial capital, of a kind not available in Denmark, or many other countries, and lots of high paying positions exist in that industry. I'll bet a large percentage of those high earning Danes in London are in professions that have some relationship to finance. Danes aren't likely to move to London to become plumbers or pink collar workers (jobs they can probably find perfectly well at home), but they if they want to be a bond trader or a financial consultant, they probably make twice as much money in London.

I think this says more about London being a big draw than it says about UK vs. Denmark economically. Lot's of ambitious and high skill foreigners from rich countries come to NYC, Chicago and SF for big money and opportunity, and lots of Americans go to London for similar reasons. You don't see the same level and kind of migration to Indianapolis or Leeds, although I'm sure that Mexicans, Nigerians, Indians and Chinese do better in those smaller cities than they would in their home countries as well.

spencer writes:

The point that the average income of Danes in London is more than $100,000 per year strongly reinforces M. Sullivans analysis.

London is also full of Americans who have moved there -- frequently by their employeer -- to participate in the London financial markets.

So does this imply that opportunity is greater in the UK than in the US? Probably not.

John Thacker writes:

Indeed. It's not as though this is El Salvador, where literally one-fourth of the country's citizens live in the USA.

See a WaPo article on it.

Buzzcut writes:

While I've never been to Denmark (well, the Amsterdam airport, but that doesn't count), I have been to many other supposedly superior countries like Sweeden, Canada, etc. My impression is reinforced by this article. Sweedes, Danes, Canadians, whatever, are a lot poorer than Americans. Maybe they don't have the teeming slums of, say, the Chicago South Side, or the rural poor that we have, but that doesn't mean that the AVERAGE VOTER is better off under Scandanavian Style socialism. Just look at how most people live.

Euopre is a nice place to visit, but I wouldn't want to live there.

Jane Galt writes:

I'm not sure how good a metric this is. Over 1% of US citizens live abroad, and their average incomes are probably higher than the American average and the UK average, just because low skilled workers are unlikely to migrate to other countries, which will by and large make it difficult for them to work.

Josh writes:

M. Sullivan, I think you missed the other piece of info, that the Danes in London represent 1% of the Danish population. Do you believe that 1% of Brits live in Denmark? I don't know the answer, but I wouldn't have guessed so. If you see a bunch of people going one way and another similar bunch going the other way, then we can probably conclude that it is as you say, just a preference for a certain type of environment (such as a strong financial center). But if there are a bunch of people going one way and not that many coming back then, while it's still just a preference for a certain type of environment, it's probably a preference that is shared by most people. Which makes the case for the Danish super-welfare system harder to accept.

Michael Sullivan writes:

"M. Sullivan, I think you missed the other piece of info, that the Danes in London represent 1% of the Danish population. Do you believe that 1% of Brits live in Denmark?"

I didn't miss it. I agreed with AK's "immigration indicator" as a (weak) demonstration of relative opportunity and success.

But you're also offering an unfair comparison. 1% of Danes living in the UK is a small ethnic enclave. If 1% of Brits lived in Denmark, they would make up over 10% of the Danish population. I wouldn't consider that to be equivalent at all. All else being equal, a country of 60 million should have a lot more economic draw (and ability to productively use foreign labor) than a country of 6 million.

A better comparison would be to look at Danes working in similar sized France or Germany (the comparison would be UK v. France, or UK v. Germany). Are they earning as much as in the UK. Are there as many as in the UK?

I'll bet not. For one thing, neither France nor Germany has a first class financial capital to rival London. The reasons London is now a serious rival to NYC, while neither Paris nor Berlin are even in the ballpark might flow right into the libertarian rhetoric, no?

TGGP writes:

There's something I've dubbed the "foot vote" that can be used to show which places are preferable to live in: net migration. Since far more Mexicans come to the United States than Americans immigrating to Mexico, we can infer the the US is a better place to live. Similarly, West Germany was better than East, South Korea better than North, Florida better than Castro's Cuba and Batista's Cuba actually not that shabby (it had net immigration from first world countries). I wish I could find a source of data that would allow me to compare all countries (especially the US vs Europe as the superiority of the former's model against the latter pops up a lot), but not even the Inductivist knew what to do there.

Speaking of immigration, one reason for you to rethink whether it is beneficial is although most international migration to the U.S goes to coastal areas and "blue states" (showing they are preferable to other countries) interSTATE migration shows native born citizens moving AWAY from those areas and toward areas with less immigration ("red" mountain states, exurbs). If immigration makes life better for us Americans, shouldn't we be moving closer to them rather than farther away?

Steve Sailer writes:

Also, Danish school teach all their students English, but English schools don't teach their students Danish.

Richard Wilson writes:

Denmark vs. United Kingdom, the Unbiased Statistical Difference.

% Population Obese;
United Kingdom: 23.0%
Denmark: 9.5%
Conclusion: Denmark has a lower obesity rate than the United Kingdom!

Life Expectancy @ Birth;
United Kingdom: 78.54 years.
Denmark: 77.79 years.
Conclusion: United Kingdom has a higher life expectancy than Denmark!

Infant Morality Rate;
United Kingdom: 5.08 per 1,000.
Denmark: 4.51 per 1,000.
Conclusion: Denmark has a lower infant mortality rate than the United Kingdom!

Net Migration Rate;
United Kingdom: 2.18 per 1,000.
Denmark: 2.52 per 1,000.
Conclusion: Denmark has a higher net migration rate than the United Kingdom!

Per Capita GDP (PPP);
United Kingdom: $30,100 [2005 estimation].
Denmark: $34,800 [2005 estimation].
Conclusion: On a PPP per capita basis, the Danish are wealthier than the British!

Unemployment Rate;
United Kingdom: 4.7% [2005 estimation].
Denmark: 5.7% [2005 estimation].
Conclusion: Britain’s unemployment rate is lower than Denmark’s!

Public Debt % GDP;
United Kingdom:
Denmark: 37.0% [2005 estimation].
Conclusion: 43.1% [2005 estimation].
Conclusion: Denmark’s public sector obligations are lower than the United Kingdom’s public sector obligations!

Current Account Balance;
United Kingdom: $-57.61 billion [2005 estimation].
Denmark: $7.753 billion [2005 estimation].
Conclusion: While the United Kingdom is suffering from an unprecedented current account deficit, Denmark is managing to operate a surplus!

External Debt % GDP;
United Kingdom: 319.0% [2005 estimation].
Denmark: 145.0% [2005 estimation].
Conclusion: The United Kingdom’s external debt is nearly two and a quarter times the size of Denmark’s external debt when compared by the external debt / GDP ratio!

While I couldn’t quickly find average workweek comparisons by country, I do know that the Danish work far fewer hours than the British, meaning that Denmark’s economy is more productive per labor hour than the British economy.

Richard writes:

Public Debt % GDP;
United Kingdom: 43.1% [2005 estimation].
Denmark: 37.0% [2005 estimation].
Conclusion: Denmark's public sector obligations are lower than the United Kingdom's public sector obligations!

dsquared writes:

I would hazard a guess that the proportion of Danes living in Britain has been roughly 1% ever since the time of the Vikings. Denmark is a small country with an explorer tradition, and has always had a big expat population. Denmark is also very generous indeed with dual citizenship; I know a couple of Danes who were born in London, have one non-Danish parent, have lived all their lives in London and who visit Denmark maybe once or twice a year to visit grandparents.

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