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The Long-Term Economic Impact of Reducing Migration in the UK

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  • Lisenkova, Katerina
  • Mérette, Marcel
  • Sánchez-Martínez, Miguel

Abstract

This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration “from hundreds of thousands to tens of thousands” as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. We undertake a simulation exercise to compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50 per cent. The results show that such a significant reduction in net migration has strong negative effects on the economy. By 2060 the levels of both GDP and GDP per person fall by 11.0 per cent and 2.7 per cent respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the effective labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.

Suggested Citation

  • Lisenkova, Katerina & Mérette, Marcel & Sánchez-Martínez, Miguel, 2014. "The Long-Term Economic Impact of Reducing Migration in the UK," National Institute Economic Review, National Institute of Economic and Social Research, vol. 229, pages 22-30, August.
    • Handle: RePEc:cup:nierev:v:229:y:2014:i::p:r22-r30_11
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    Cited by:

    1. MONGELLI Ignazio & CISCAR MARTINEZ Juan Carlos, 2018. "Economic consequences of zero international migration in the EU: An assessment for Europe based on the Eurostat population projections," JRC Research Reports JRC109196, Joint Research Centre.
    2. Miguel Sanchez-Martinez & Philip Davis, 2014. "A review of the economic theories of poverty," National Institute of Economic and Social Research (NIESR) Discussion Papers 435, National Institute of Economic and Social Research.
    3. Heike Delfmann & Sierdjan Koster, 2014. "New firm formation and its effect on employment growth in declining regions," ERSA conference papers ersa14p1133, European Regional Science Association.

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