LSE Business Review blog:
New immigrants don't affect the job prospects of UK-born workers
18 October 2016
New arrivals flock to the occupations and industries in which existing immigrants work, argues Barbara Petrongolo.
Most economists would argue that there is not much of a trade-off involved in this choice. The EU is the UK's largest trade partner (accounting for about half of UK trade flows) and losing access to the Single Market would inevitably damage the UK economy. Dhingra et al (2016a) calculate that in an optimistic scenario in which the UK remains a member of the EEA, it would suffer a 1.3% decline in GDP per head, mostly resulting from the impact of non-tariff trade barriers on trade flows.
But in a pessimistic scenario in which the UK leaves the EEA and trade between the UK and the EU is governed by World Trade Organization rules, the higher increase in trade costs would induce a fall in GDP per head of about 2.6%. To be added to this is the resulting fall in foreign direct investment, which is estimated to produce an even stronger decline in UK GDP than the increase in trade costs (Dhingra et al, 2016b).
Is it economically worthwhile to bear these costs in order to retain controls on immigration flows from the EU? EU immigration has represented the bulk of the recent growth in the share of foreign-born population in the UK, especially after the EU enlargement of 2004, and EU nationals have entered - to varying degrees - all sectors of the UK economy.
This article was published by the LSE Business Review blog on October 18, 2016
Link to article here
Related publications
Brexit Beckons: Thinking ahead, VoxEU ebook by leading economists including Barbara Petrongolo. See Chapter 14: 'Brexit and labour markets'
Brexit and the UK Labour Market, Barbara Petrongolo. Article in CentrePiece, Volume 21, Issue 2, Autumn 2016
Related links
Barbara Petrongolo webpage
Labour Markets Programme webpage
Barbara Petrongolo CEP publications webpage