The Impact of Brexit on UK Immigration and Labour Supply: Evidence from Synthetic Differences in Differences

This paper estimates the causal impact of Brexit on migrant employment in the United Kingdom using a synthetic difference-in-differences (SDID) framework. We construct a counterfactual trajectory for the UK based on a weighted combination of comparable European economies and compare post-referendum outcomes to this benchmark. Rather than analysing migration flows, which are subject to substantial revision and comparability issues, we focus on employment stocks of foreign-born workers using administrative payroll data. We find that Brexit led to a large compositional shift in migrant labour supply and a modest change in its overall size. Employment of EU-origin workers declined substantially relative to the counterfactual following the 2016 referendum and the subsequent end of free movement. However, this decline was more than offset by a sharp increase in employment among non-EU workers after the introduction of the post-Brexit immigration system in 2021. By 2024, total foreign-born employment is about 0.6% higher than in the absence of Brexit. Brexit did not reduce migrant labour supply as widely expected, but instead reconfigured its composition, and highlight the interaction between migration policy and labour demand.