The impact of immigration on UK native wages

Presenter: Deboshree Ghosh, University of Aberdeen

Most of the existing literature which examines the impact of immigration on native wages are at the national level with little focus on the dynamics between regional wages, internal migration and immigration. The papers which explore the regional convergence or divergence due to internal migration mostly use the regional averages. This could be misleading as a higher regional average does not signify the underlying inequality represented by the wage distribution. The research presented here aims to investigate the impact of immigration on regional average wages and the wage distribution in the pre and post-recession period (1999-2015) in UK. At the average level, holding perfect substitution between immigrants and natives, the results indicate that a 10 percent increase in immigrant share caused about 0.3 percent increase in average native wages in both pre and post-recession period. However, at the wage distribution level, allowing for imperfect substitutability between natives and immigrants, the results were different. On one hand in the post-recession period, allowing for imperfect substitutability, the immigrants induced a positive impact ranging from 0.2 to 0.5 percent on native wages at all percentiles except on the 5th where the impact was insignificant and the 10th where the impact was -0.07 percent. Whereas in the pre-recession period, the negative impact of immigrants was indicated not only at the lowest 5th percentile but also on the highest 95th percentile. A further investigation on the occupation degradation by education of immigrants previously stated in literature indicated the degradation was higher during 2009-2015 than between 1999-2008.