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Impacts of immigration on population and the economy

Published Monday, July 25, 2016

This note looks at the impacts of immigration on different aspects of the economy and society, including population growth, employment, earnings, public services and the public finances.

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In January-March 2016, there were an estimated 8.95 million people living in the UK who were born in other countries, although this includes some UK nationals. An estimated 5.87 million people living in the UK were nationals of other countries.

Immigrants to the UK are more concentrated in working age-groups than the UK population as a whole. In Q1 2016 around 54% of people born abroad and living in the UK were aged 25-49, compared with around 30% of those born in the UK.

The impact of immigration on employment, wages and other economic indicators depends on the characteristics of immigrants and the extent to which their skills complement those of existing workers. Most studies looking at the impact on UK employment have found small or ambiguous effects on average, but there is some evidence of adverse effects on employment during periods when the economy is weak. Looking at wages, most of the literature concludes a rise in the number of migrant workers has little effect on wages on average but adverse effects tend to be focused on low-skilled workers.

Similarly, the extent to which immigrants contribute to the public finances and the impact on public services is likely to depend on their age, skills, employment income and if they have children. Research suggests immigrants who have arrived in the UK more recently and who come from countries in the European Economic Area (EEA) are more likely to make a positive contribution to public finances.

While this note discusses the impact of immigration at the national level, effects are likely to vary by local areas. In its 2014 report on Migrants in low-skilled work, the Migration Advisory Committee observed:

… there needs to be greater recognition of, and support for, the local impact of immigration. The non-UK born population of England and Wales grew by 2.9 million between 2001-11. Three quarters of this rise happened in just a quarter of local authorities. Although we show that, nationally, the economic impact of immigration on GDP per head, productivity and prices is very modest, the economic and social impact on particular local authorities is much stronger. This includes pressure on education and health services and on the housing market and potential problems around cohesion, integration and wellbeing.

 

 

Commons Briefing papers CBP-7659

Authors: Feargal McGuinness; Oliver Hawkins

Topics: Employment, Immigration, Pay, Public expenditure

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