Abstract
This paper highlights a number of important gaps in the UK evidence base on the employment impacts of immigration, namely: (1) the lack of research on the local impacts of immigration – existing studies only estimate the impact for the country as a whole; (2) the absence of long-term estimates – research has focused on relatively short time spans – there are no estimates of the impact over several decades, for example; (3) the tendency to ignore spatial dependence of employment which can bias the results and distort inference – there are no robust spatial econometric estimates we are aware of. We aim to address these shortcomings by creating a unique data set of linked Census geographies spanning five Censuses since 1971. These yield a large enough sample to estimate the local impacts of immigration using a novel spatial panel model which controls for endogenous selection effects arising from migrants being attracted to high-employment areas. We illustrate our approach with an application to London and find that no migrant group has a statistically significant long-term negative effect on employment. EU migrants, however, are found to have a significant positive impact, which may have important implications for the Brexit debate. Our approach opens up a new avenue of inquiry into subnational variations in the impacts of immigration on employment.
Highlights
A steady flow of articles from the UK populist press over the past decade have claimed or implied that migrants are taking the jobs of UK-born workers.1 This claim, and the debates surrounding it, have shaped the political agenda on immigration making it one of the defining issues in the Brexit2 referendum
While the impact of migration on employment and the economy as a whole may be positive overall, it is possible that the local impacts vary considerably
In the remainder of the paper we describe our proposed method for estimating local impacts of immigration, one that exploits the large samples and long time span that can be achieved by linking Census data at the small area level over five decades
Summary
A steady flow of articles from the UK populist press over the past decade have claimed or implied that migrants are taking the jobs of UK-born workers. This claim, and the debates surrounding it, have shaped the political agenda on immigration making it one of the defining issues in the Brexit referendum. The usual counter from economists is that such claims tend to fall prey to the ‘lump of labour fallacy’ (Schloss, 1981): the fallacious assumption that there is a fixed amount of work, and a fixed number of jobs, in the economy Under this assumption, a job offered to a migrant worker is necessarily a job opportunity taken away from UK-born workers. Migrants increase cultural diversity, which in turn has the potential to boost innovation, social capital, tolerance, overseas trade links and growth (Elias and Paradies, 2016) Seventh, because they tend to be highly mobile and responsive to wage differentials, migrants help ‘grease the wheels of the labour market’ (Borjas, 2001) by responding to higher wages produced by regional labour shortages, improving labour market efficiency which in turn helps foster productivity and growth. The final section concludes with a brief summary of the findings and limitations
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