Politicians in wealthy countries are worried that immigration is a drain on the public purse. But a recent OECD survey of the American economy proves otherwise, reports The Economist. Those setting the rules for immigration rarely have economics at the forefront of their thoughts. For better or worse, popular emotions usually looms largest in politicians' deliberations -- and in most developed countries, the most influential emotion in recent years has been ``keep them out.''

America is the ideal laboratory for testing the economic impact of migration. More than 5 million immigrants arrived during 1991-1996 alone, and most Americans can still trace their family's arrival from abroad. America still has a fairly welcoming attitude to the world's huddled masses. But controls on immigration have become tougher in recent years, amid fears that immigrants are taking jobs from American citizens and imposing excessive costs on government. A new OECD survey of America's economy suggests that these fears are not justified.

After reviewing a large number of studies of the economic impact of immigration, the OECD concludes that immigration is good, not bad, for America's economy. Some studies have found that the wages and employment of natives (usually unskilled ones) fall when immigrant workers arrive. For example, a new analysis by Daniel Hamermesh, an economist at the University of Texas, finds that immigrants are no more likely to be working nights or to be injured on the job than white native-born workers, challenging the widespread notion that immigrants largely take jobs that natives don't want. According to the OECD study, however, most studies have found that the negative effect of immigration on native workers is small and short-lived.

Immigration has a more significant effect on welfare spending. Foreign born residents of America are 35 per cent more likely to receive public assistance than natives. In large part, this reflects the poor education, larger families and weak English-language skills of many immigrants. This trend has become more pronounced because the skill levels of many immigrants, relative to those of natives, are declining. Immigrants, on an average, also 32 per cent less in tax during their lifetime, than natives do. Combining higher welfare costs and lower tax receipts, the OECD reckons, America's federal, state and local governments were $15 billion-20 billion worse off last year owing to immigration.

So why not decide immigration cases using economic criteria? This already happens in Australia and Canada, both of which use a system of points to select those immigrants likely to be the greatest economic benefit to their new country. Although admitting only economically desirable immigrants appeals in theory, it turns out to be a difficult idea for governments to put into practice.

Pension tax relief wasted

Tax relief amounting to -- 500m has been wasted on lapsed personal pensions in the last six years, according to the telephone-based insurer Direct Line, reports the Financial Times.

Direct Lines, which plans to enter the personal pensions market next year, said the money was absorbed by pension providers and charges because policies that lapse in the early years have little or no residual value. Greater transparency and flexibility was needed, it added.

``These figures illustrate the fact that hundreds of millions of pounds are being paid by both the government and consumers into personal pensions which are not flexible enough to change when people's circumstances change,'' says Duncan MacKechnie, Direct Line Life chief executive.

The Personal Investment Authority's consumer panel has said about 30 per cent of personal pension plans lapse within the first three years.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.