Immigration Improves U.K. Labor Market, Says Blanchflower
In January, David
Blanchflower, Bruce V. Rauner 1978 Professor of Economics, delivered a
speech to the Cambridgeshire (United Kingdom) Chamber of Commerce. During that
talk and in a subsequent research paper, he outlined his study of how recent
immigration to the United Kingdom has impacted its economy. He concluded that
the entry of immigrants, specifically from Eastern Europe, appears to have
improved the workings of the U.K. labor market, reduced wage and inflationary
pressures, and lowered the natural rate of unemployment.
David Blanchflower (Photo by Joseph Mehling '69)
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Blanchflower, who also is a member of the Bank of
England's Monetary Policy Committee (MPC), worked with colleagues Jumana
Saleheen and Chris Shadforth, both external members of the MPC. They examined
U.K. population growth over the last 35 years, which has been low compared to
other countries including the United States, Canada, France, Ireland, and
Japan, and they looked into the rapid rise in the number of immigrants from
East European countries, so-called A8 countries that joined the European Union
in May 2004.
"We found little or no evidence that immigrants have had a major impact
on U.K. labor market outcomes such as wages and unemployment, and this is
consistent with work by a number of other authors," says Blanchflower.
"In fact, we argue that at present, the entry of recent A8 immigrants
appears to have improved the workings of the labor market, reduced wage and
inflationary pressures and lowered the natural rate of unemployment."
Blanchflower, as a member of the MPC, cites this UK immigration research as
one of the reasons he has voted against raising interest rates three times
since last August. Despite his vote, the MPC has raised interest rates, most
recently in January, to 5.25 percent. In the January vote, the increase only
passed by the narrow margin of 5-4.
More information about the MPC, along with Blanchflower's paper, is
available online.
By SUSAN KNAPP
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