The effect of Immigration into the UK

This short essay is concerned about the impact on labour markets, it does not consider political and social issues arising from immigration.

Effect of Net Migration

1. Increases the supply of labour. This may depress wages, especially in job sectors where immigrants tend to find work.

2. Immigration increases AD This is because there are more people spending and therefore, demand for labour. This means that wages may not fall. However, if immigrants send a high % of their earnings back to family and friends in their original country, AD may not increase that much.

3. Unemployment.

Immigration may cause unemployment if:

  • Immigrants have low skills and / or struggle with English. This limits the range of jobs available and can lead to structural unemployment. This structural unemployment may be exacerbated by racial discrimination.
  • However, on the other hand some economists argue unemployment levels amongst immigrants are often exaggerated. The reason behind this is that immigrants are more likely to work on the black market (underground economy) For example, immigrants often work for less than the NMW for cash in hand. (This can lead to exploitation of workers and ignoring health and safety legislation)

Immigration may not cause unemployment if the immigrants have the relevant skills and capacities to work. Also, the UK economy has a shortage of certain key public sector workers, especially in London. Therefore, if immigrants are trained to be nurses, doctors or teachers they can help fill labour market shortages.

4. Age profile of immigrants.

Immigrants tend to be of working age. Therefore, they can help overcome the demographic problems of an ageing population. This may enable income tax to be lower than it otherwise would have been. Immigrants of working age will help contribute taxes (assuming they find official work) They will not require pensions.

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Perma Link | By: T Pettinger | Tuesday, June 5, 2007
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