Impacts of immigration on population and the economy

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

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.

• Primary Source

EurActiv, 28.07.16: Brexit shockwaves hit UK consumers, wages and construction http://www.euractiv.com/section/uk-europe/news/brexit-shockwaves-hit-uk-consumers-wages-and-construction/

ESO: In Focus: Brexit - The United Kingdom and the European Union http://www.europeansources.info/record/brexit-the-united-kingdom-and-the-european-union/

UK: Parliament: House of Commons: Library: Briefing Paper, No.7673 (01.08.16): A new 'Controlling Migration Fund' for the UK? http://researchbriefings.files.parliament.uk/documents/CBP-7673/CBP-7673.pdf

UK: Parliament: House of Commons: Library: Briefing Paper, No.7675 (02.08.16): Brexit and UK immigration and asylum policy: a reading list http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7675

---