Quarterly Bulletin Immigration Articles

2007 Q1 The macroeconomic impact of international migration (542k)
(By Richard Barwell of the Bank's Conjunctural Analysis and Projections Division). Net inflows of migrants have accounted for the majority of UK population growth over the past decade. Migrants who travel to the United Kingdom to work increase the supply of labour to UK companies, and indirectly encourage them to invest in more machinery and equipment, thereby boosting the supply capacity of the economy. Migrants also add to the level of demand in the economy. The issue for monetary policy makers tasked with maintaining control of inflation is how migration affects the balance between demand and supply, and that is likely to depend on the nature of the migrant inflow. Recent migrant inflows appear to have had a slightly larger impact on supply than demand, and may therefore have depressed inflationary pressures in the economy.
2006 Q4

The economic characteristics of immigrants and their impact on supply (638k)
(By Jumana Saleheen and Chris Shadforth of the Bank's External MPC Unit). Immigration to the United Kingdom has risen rapidly over the past decade, driven most recently by flows from the ten EU Accession countries. Monetary policy makers are interested in the impact of immigration on the macroeconomy and inflation. An increase in the number of immigrants, other things being equal, would raise the supply potential of the economy. But the extent to which potential supply increases will depend on the economic characteristics of immigrants. This article investigates the characteristics of immigrants, particularly new immigrants - those who have entered the United Kingdom in the past two years. It appears that new immigrants are more educated than both UK-born workers and previous immigrant waves, but are much more likely to be working in low-skilled occupations. The increasing share of new immigrants in low-skill, low-paid jobs seems to have led to the emergence of a gap between the wages of new immigrants and UK-born workers. The implications of these findings for overall productivity and the supply side of the economy are complex.

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