Immigration contributes positively to average wage growth in UK

Immigration in the UK has contributed positively to average wage growth of UK-born workers, a new study has revealed.

The study by economists Christian Dustmann, Tommaso Frattini and Ian Preston, entitled “The Effect of Immigration along the Distribution of Wages” shows that while benefiting workers in the middle and upper part of the wage distribution, immigration put downward pressure on wages of workers at the bottom of the wage distribution.

The research also shows that recent immigrants downgrade considerably in the labour market, working in jobs that are less skilled and paid lower wages than appropriate for their level of education.

Immigrants to the UK are on average better educated than UK citizens, however most end up initially in the lowest paid occupational groups.

Immigrants tended, over the period considered, to be more concentrated than the UK-born in the lowest quarter of the native wage distribution where evidence of negative wage effects is strongest, and less concentrated in the middle of the distribution where evidence is suggestive of wage gains.

The research also shows that immigration held wages back by 0.7p per hour at the 10thpercentile, contributed about 1.5p per hour to wage growth at the median and slightly more than 2p per hour at the 90thpercentile.

The researchers say: "Immigration affects different parts of the workforce differently. Over the period we consider, there have been gainers and losers and while the gainers may have outnumbered the losers and the gains may have been positive on average, the losers tend to have been lower down the wage distribution than the gainers."

The main dataset used in the study was the UK Labour Force Survey (LFS) over the period 1997 until 2005. This data is also combined with information from the 1991 UK Population Census.

The study has been published in the journal “Review of Economic Studies”.

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