L Alan Winters
Professor of Economics
CEO, Migrating Out of Poverty Research
Programme Consortium

8th March 2016
Outline
•
BREXIT vs. non-BREXIT
•
The nature of the flow
•
The BREXIT thesis and objective
•
Can they do it?
•
Should they do it?
BREXIT and Migration 2

Y
The Counterfactual I
8th March 2016
?BREXIT?
BREXIT and Migration time
3

Y
The Counterfactual II
8th March 2016
BREXIT
BREXIT and Migration time
4

Net Migration 1975-2015
Source: ONS, Migration Statistics Quarterly Report: February 2016
8th March 2016 BREXIT and Migration 5

The BREXIT Thesis
•
Migration is unsustainably high – harms natives
• Can’t control numbers while in EU (Nigel
Farage’s 500 million)
• Can’t control composition to favour skills
6 8th March 2016 BREXIT and Migration

(I) Immigration from EU
Source: ONS, Migration Statistics Quarterly Report: February 2016
8th March 2016 BREXIT and Migration 7

Drivers of Migration
•
Unemployment (U%) .
•
Relative income (rel Y%)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EU14
9.1
8.4
7.4
7.4
9.3
9.8
9.8
11.1
11.7
11.3
U% rel Y% 83.7
84.4
84.9
85.8
85.9
86.9
87.0
86.0
84.2
82.7
EU8
U% 8.3
7.8
7.4
7.1
9.7
11.2
11.7
13.2
13.4
11.6
rel Y% 24.3
25.4
26.6
27.7
28.3
28.9
29.7
29.8
29.7
30.0
EU2
U% 8.0
7.7
6.5
5.7
6.9
8.1
8.4
8.4
8.8
8.2
rel Y% 11.1
11.8
12.7
14.0
13.9
13.8
13.9
13.9
14.2
14.3
8th March 2016 BREXIT and Migration 8

Education
Source: Wadsworth J. (2015) Immigration and the UK Labour Market , CEP, LSE
8th March 2016 BREXIT and Migration 9

Occupations
Source: Wadsworth J. (2015) Immigration and the UK Labour Market , CEP, LSE
8th March 2016 BREXIT and Migration 10

Sectors
Source: Wadsworth J. (2015) Immigration and the UK Labour Market , CEP, LSE
8th March 2016 BREXIT and Migration 11

Can they do it?
•
Migration from EU likely to abate anyway
–
Steady state for EU2, Economic recovery
–
But pressure to recruit into key sectors
•
BREXIT would restrict less-skilled access, but
–
Flow restrictions may not cut migrant stocks
–
Needs of service sectors and construction
•
Probably cut skilled inflow too
–
Finance sector, MNC circulation, life-cycles
•
Net effect negative but not massive
8th March 2016 BREXIT and Migration 12

Migration Boosts Output
•
Moves workers to where most productive
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Macro/regional/sectoral
•
Eases adjustment to shocks
•
Accommodates long-run trends
•
Allows agglomeration
– Why doesn’t trade do this?
•
Costly, and impossible for many things (services)
•
Sticky relative sizes of sectors in each location
–
In fact, migration has a positive effect on trade
•
Networks; easy contacts
8th March 2016 BREXIT and Migration 13

Matching
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Individual benefit – getting a better job and being able to focus on it
– skilled women’s participation
–
As important for UK emigration as immigration
•
Firms benefit
– critical workers (key for MNCs and hence for FDI)
•
Migration can affect industrial structure:
–
Horticulture, Clothing, Catering, Type of building
8th March 2016 BREXIT and Migration 14

Gains from Mobility (in order of size):
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Migrants themselves – huge
•
Same person might double output even in Europe
•
Employers (capital)
•
Complementary workers
–
Better managers? More workers to organise?
•
Society in general, including
–
Consumers of goods and services
–
Fiscal authorities
8th March 2016 BREXIT and Migration 15

Costs: Economic and Social
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Competing workers
–
Weak wage effects – migrants may increase demand for non-traded goods – hence labour.
–
Enforcement of minimum wages matters
–
Previous migrants often hit hardest
•
Congestion
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Health, Education, Housing (but evidence is weak)
•
Social Cohesion
–
Slight evidence of stresses, but many other factors
–
Cohesion of Europe – co-operation
8th March 2016 BREXIT and Migration 16

8th March 2016 BREXIT and Migration 17