Effect of migration on wages

As shown by Jonathan Portes, the estimated impact of migration on wages of people in semi-skilled and unskilled services (care homes, bars, restaurants, shops, cleaning etc.) is smaller than previously thought.

The finding comes from the paper, entitled, “The impact of immigration on occupational wages: evidence from Britain”, by Stephen Nickell and Jumana Saleheen

“In the latter cases, the coefficients indicate that a 10 percentage point rise in the proportion of immigrants working in semi/unskilled services –  that is, in care homes, bars, shops, restaurants, cleaning, for example – leads to a 1.88 percent reduction in pay.”

This means that there is less than 2% reduction in pay for an equivalent 10% increase in migrants working in the sector. The above paper is an update of a previous paper published in 2008 , where the authors found a 5.2% reduction in pay corresponding to a 10% increase in immigration.

An LSE evidence analysis found that:

“Empirical research on the labour market effects of immigration to the UK finds little overall adverse effects of immigration on wages and employment for the UK-born…The less skilled are closer substitutes for immigrants than the more highly skilled. So any pressures from increased competition for jobs is more likely to be found among less skilled workers. But these effects are small (Manacorda et al, 2011; Dustmann et al, 2005, 2013; Nickell and Saleheen, 2008).”

“It is hard to find evidence of much displacement of UK workers or lower wages, on average. Immigrants, especially in recent years, tend to be younger and better educated than the UK-born and less likely to be unemployed. But there have been some effects. The less skilled may have experienced greater downward pressure on wages and greater competition for jobs than others, but these effects still appear to have been small.”

Mette Foged and Giovanni Peri studied refugees arriving in Denmark between 1991 and 2008, and found that the presence of refugee-country immigrants encouraged low-skilled native workers to get higher paid and more specialised jobs.

Low pay is NOT due to migration, but the casualisation of work (zero hours contracts etc.), the separation between productivity and profits, inequality between employees, low trade unions’ contractual power etc.

Here are a few reports/articles:

Wage growth and productivity growth

Wages, productivity, and demand 

Low Pay Britain (Resolution Foundation Report)

Low pay, low productivity cycle

UK’s low productivity

This entry was posted in economy, EU, labour market, migration, skills, wages and tagged , , . Bookmark the permalink.

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