The Differentiated Impact of Immigration on the UK Labour Market. New Micro and Macro Evidence

Abstract

How migration inflows affect destination labour markets is at the centre of nowa[1]days economic and political debate. According with the latest data (OECD DIOC 2013), immigrant workers tend to concentrate toward the bottom and the top of the destination labour markets’ job distributions. Yet, the labour economics lit[1]erature fails in providing UK based micro-level evidences over the differentiated effect of migration across occupational categories. This thesis addresses a first research question over the impact of foreign workers on rates of wage growth at individual level across occupational categories in the UK, for the period 1991-2008. In doing so, a longitudinal analysis is conducted and a novel Instrumental Variable strategy is introduced. The obtained findings reveal significant effects for selected occupational categories. Moreover migration, as labour supply factor, has largely involved advanced economies in the last four decades and structural consequences in terms of employment and labour earning distributions are most likely. At the same time, since the late ‘80s, a demand sided technological change has been investigated as the main determinant of structural labour market changes across advanced economies. Related strands of economic literature acknowledge potential roles played by supply-side labour market forces but there are no investigations over the role played by increasing migration in[1]flows. This thesis addresses a second research question over the role played by foreign labour force supply in structural changes occurred at UK labour market level in the time window 1995-2015. In particular, the role of increasing migration inflows in determining rates of wage growth at aggregated occupational level is investi[1]gated. This pioneering exploration reveals a differentiated pattern of the impact of foreign labour force for occupations ranked respectively at the i. bottom, ii. middle and iii. top of the distribution of employment in the period 1995-2015 ranked by initial wage at occupational level.