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U.K. Immigration Has Little Impact on Employment, Wages

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  2. U.K. Immigration Has Little Impact on Employment, Wages

Immigration had little or no impact on average employment or unemployment of existing workers, according to a 2018 review of the U.K.’s Migration Advisory Committee.

Much of the discussion and concerns around immigration in the United Kingdom centre around the impact it has on the labour market and wages of the local population.

Immigration alters the number of workers in the economy and increases the supply of labour in certain industries. But immigration also expands demand for goods and services as new people come to live in a country and so results in new jobs and increases demand for workers.

According to a report by The Migration Observatory at the University of Oxford Centre on Migration, Policy and Society, the impact of migration on wages and employment prospects for U.K.-born workers are small. Several studies have examined whether immigration leads to higher unemployment or lower wages among existing workers, and most have found either small or no effects.

The report said that the Migration Advisory Committee in 2018 reviewed the results of studies conducted between 2003 and 2018 and drew three conclusions. First, immigration had little or no impact on average employment or unemployment of existing workers. Second, where an impact was found, it was usually concentrated in certain groups – it had a negative effect for those with lower education and a positive effect for those with higher levels of education. And third, the impact may depend on the economic cycle; some—though not all—studies have found adverse effects on employment or unemployment, specifically during downturns.

The MAC review also concluded that immigration had had little impact on average wages, according to previous research. Some studies had found a small negative impact on average wages, while others found positive average effects. Low-paid workers were negatively affected, while there were positive effects on high-paid workers, although both effects were small.

For example, a 2022 study found that immigration to the U.K. from 1994 to 2016 reduced the hourly wage of U.K.-born wage earners at the 5th percentile (i.e. the lowest earners in the labour market) by around half of one pence per year. The gains for top earners were also small: 1.7p per year for people at the 90th percentile of wage earners. Another study focusing on wage effects at the occupational level found that, in low-wage service sector jobs, a 1 percentage point rise in the share of migrants reduced average wages in that occupation by about 0.2 percent. These results are broadly similar to findings from other studies.

According to research any adverse wage effects of immigration are likely to be greatest for resident workers who are themselves migrants. This is because the skills of new migrants are likely to be closer substitutes for the skills of migrants already employed in the UK than for those of U.K.-born workers.

One U.K. study concluded that the main impact of increased immigration from 1975 to 2005 was on the wages of migrants already in the U.K. The finding that negative impacts on wages fall primarily on people who migrated themselves is consistent with earlier research from the United States, according to the Migration Observatory report.

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