The Impact of the Recent Migration from Eastern Europe on the UK Economy (PDF; 299 KB)
Source: Bank of England

The empirical literature from around the world suggests little or no evidence that immigrants have had a major impact on native labour market outcomes such as wages and unemployment. Recent work by a number of other authors for the UK is also consistent with this view.

The impact of recent migration from the A8 countries on the UK economy will be determined by the extent to which immigrants add to supply relative to demand, since it is the balance between these two factors that determines prospects for inflation. We argue that at present it appears that A8 immigration has tended to increase supply by more than it has increased demand in the UK (in the short run), and thereby acted to reduce inflationary pressures.

There seems to be broad agreement that immigration is likely to have reduced the natural rate of unemployment in the UK over the past few years. But there is some uncertainty about what has happened to the natural rate in the very recent past and what might happen to it in the near future. This is because immigration has not been the only shock to affect the labour market very recently. This paper examines the relationship between the rising unemployment rate and other structural developments across regions, but fails to find any statistically significant relationships. It seems appropriate to conclude that the natural rate of unemployment has probably not risen in the very recent past and that recent immigration continues to suppress inflationary pressures.

This entry was posted on Friday, January 5th, 2007 at 3:42 pm and is filed under Business and economics, Europe, Immigration, Labor, United Kingdom. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.