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Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008
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Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Jan 02, 2016

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Page 1: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Labour Market Trends and the Impact of Migration

Howard Reed

Chief Economist

Ippr

28 February 2008

Page 2: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Outline

• Recent labour market performance• Facts about migration and migrants• Impact of migration on labour market

– Basic statistics– More sophisticated empirical work

• Things we still don’t know

Page 3: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

UK employment rate, 1992-2007

60

65

70

75

80

85

90

1992 1994 1996 1998 2000 2002 2004 2006

year

% o

f w

ork

ing

ag

e p

op

. in

wo

rk

All Men Women

Source: ONS/Labour Force Survey

Page 4: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

UK unemployment rate, 1992-2007

0

2

4

6

8

10

12

14

1992 1994 1996 1998 2000 2002 2004 2006

year

% o

f w

ork

ing

ag

e p

op

. Un

em

plo

ye

d

All Men Women

Source: ONS/Labour Force Survey

Page 5: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Unemployment by age group, 2001-07

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007year

% u

nem

plo

yed

18-24 25-49 50+ All

Source: ONS/Labour Force Survey

Page 6: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

2001 2002 2003 2004 2005 2006 2007

UK born 16-24

Foreign born16-24

UK born 25-39

Foreign born25-39

UK born 40+

Foreign born40+

Source: Labour Force Survey 2001Q2-2007Q2 and ippr calculations

Employment rates by age and birthplace, 2001-07

Page 7: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

0

100

200

300

400

500

600

700

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Number (thousands)

Out migration

In migration

Total migration, 1996-2006

Source: Home Office

Page 8: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Foreign born working age population as % of working age population, 1997-2006

Page 9: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

‘Migrants’ are a diverse group

• Asylum-seekers & those granted refugee status• EU labour migrants pre-2004• EU labour migrants from A8/A2 countries• EU secondary migrants – Congolese and Tamils from France,

Somalis from Netherlands.• Work permit holders and dependents• Family reunion cases• Overseas students and dependents – 309,000 primary entrants

in 2006• Irregular migrants: clandestine entrants, asylum and visa

overstayers, • ‘Returning’ British nationals, for example from Zimbabwe.

Page 10: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Labour market experiences differ widely by country of origin

e.g. Economic activity:Canada 85% employed, 2% unemployed and 13%

inactiveUK 78% employed, 4% unemployed and 18% inactiveNigeria 76% employed, 7% unemployed and 17%

inactiveSomalia 19% employed, 10% unemployed and 71%

inactive.

Page 11: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Diverse Prior Education

Qualifications by Country of Birth• UK 36.2% higher level qualifications.• Somalia 11.8% higher level• Poland 19% higher level• USA 58.8% higher level• Nigeria 53.5% higher level

Page 12: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Average gross hourly pay from main job of economically active population aged 16-59/64 by country of birth, 2005/06

• USA - £17.10 • Australia - £15.20• Uganda - £13.40• Kenya -£12.50• Italy - £11.90• Jamaica -£11.60• UK - £11.10• Nigeria - £10.80• Ghana -£9.40• Bangladesh - £9.30• Turkey - £8.20• Somalia - £7.90• Poland - £7.30

Source: Labour Force Survey

Page 13: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

340

360

380

400

420

440

460

480

Q4 2

001

Q2 2

002

Q4 2

002

Q2 2

003

Q4 2

003

Q2 2

004

Q4 2

004

Q2 2

005

Q3 2

005

Q4 2

005

Q1 2

006

Q2 2

006

Q3 2

006

Q4 2

006

UK-born

Foreign-born

Gro

ss W

eekl

y W

age (£)

Average wages of UK and foreign-born workers, 2001-06

Source: Labour Force Survey

Page 14: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Has recent migration affected wages or employment in the UK?

Part (a): ‘Eyeballing’ the data…

Page 15: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Unemployment vs migrant concentration, local area districts

Page 16: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Wage growth vs migrant concentration, local area districts

Page 17: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

0 2 4 6 8 10 12 14 16

Agriculture and Fishing

Energy and Water

Construction

Public Administration, education andhealth

Other services

Manufacturing

Distribution, Hotels and Restaurants

Transport and Communication

Banking, Finance and Insurance

%

Vacancies as % of the sector’s workforce % of Foreign Born Workers

Are migrants pushing UK workers out of jobs? Vacancies and % of foreign born workers in industry sectors

Page 18: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Average gross hourly pay in low-paid industry sectors*

0 2 4 6 8 10 12 14

UK-Born Agriculture andFishing

Foreign-Born Agriculture andFishing

UK-Born Construction

Foreign-Born Construction

UK-Born Distribution, Hotelsand Restaurants

Foreign-Born Distribution,Hotels and Restaurants

2004

2005

2006

2007

Average gross hourly pay in lowest paid industry sectors 2004-07

Page 19: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Has recent migration affected wages or employment in the UK?

Part (b): More rigorous empirical evidence…

Page 20: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Dustmann et al (2007): • Many recent immigrants ‘downgrade’ considerably –

lower wage jobs than their qualifications suggest• Immigration has had overall positive effects on UK

wages but negative effects on the low-paid. Both effects are small.

Manacorda et al (2007) • Increase in immigration has lowered wages of

immigrants, but little impact on UK born workers.

Page 21: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Blanchflower et al (2007)• Migration has reduced inflationary pressure in the UK

economy and (therefore) reduced the sustainable level of unemployment

Gilpin et al (2006, DWP)• “no discernible statistical evidence to suggest that A8

migration has been a contributor to the [modest] rise in claimant unemployment in the UK”.

Page 22: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

Conclusions• Recent UK employment performance impressive

(and remains so, so far)• Some increase in youth unemployment since 2005• Large increase in foreign born workforce as % of

overall• Migrants highly diverse• No evidence of any large impact of migration on

wages or employment in the UK• But there is much we still don’t know…

Page 23: Labour Market Trends and the Impact of Migration Howard Reed Chief Economist Ippr 28 February 2008.

There is much we still don’t know

• Effect of immigration at low-skill vs high-skill levels (data doesn’t measure migrant skills well)

• Local area effects (data poor – hard to get hold of, survey samples not big enough)

• How long do immigrants stay? How many return home or go to another country? (data poor)

• ippr’s new project on the economics of migration will look at some of these questions in more detail