The increase in net immigration to the UK from the mid-1990s to the mid-2000s was not driven primarily by the economic performance of the UK or other countries, according to research by James Mitchell, Nigel Pain and Rebecca Riley.
Rather, about three quarters of this increase was associated with structural change, which may be the result of changes in UK immigration policy and immigration policy in other migrant host countries – for example, enlargement of the European Union (EU).
The study, published in the December 2011 issue of the Economic Journal, develops econometric models to examine across time the determinants of international migration to the UK from 14 different world regions. Among the findings:
- The number of people migrating to the UK rose from 195,000 a year at the beginning of the 1980s to 524,000 a year, on average, between 2004 and 2007.
- UK emigration has also risen. Nevertheless, net immigration has increased substantially over this period – from minus 42,000 a year in the early 1980s to 178,000 a year in the mid-2000s.
- Almost all of the increase in the decade since the mid-1990s was accounted for by a rise in immigration into the UK from the Asian Commonwealth (including India and Pakistan), Other Asia (including China) and the A8 (the countries that joined the EU in 2004).
The researchers also point out the uncertainty surrounding forecasts of future immigration:
''Given the considerable uncertainties associated with migration forecasts, we recommend that these are shown in terms of a fan chart rather than as point forecasts. At least users of the forecasts have then been warned – in advance – about the uncertainties associated with the forecasts.''
Their study explores the robustness of economic and policy variables in explaining migration. While there are a number of theoretical models about what drives migration, considerable uncertainty remains. This is a major challenge for empirical research.
The researchers take an approach where thousands of competing models of migration to the UK from individual regions abroad are compared. The ''robust'' determinants of immigration to the UK are then identified as those that, across the models, best explain trends in the data. In particular, the study aims to evaluate the factors contributing to the sharp per annum increase in net immigration over the last decade.
This approach points to the importance of structural breaks that coincide with changes in UK immigration policy in explaining increases in net immigration over time. Specifically, policy is found to be important in affecting immigration into the UK from those regions where immigration has grown most rapidly. But it is not only UK immigration policy that matters but also that of other host countries.
The study also finds a role for economic determinants of migration, including the economic cycle (proxied by the unemployment rate) and relative incomes. Again, the situation in comparison with other hosts is important. But these economic drivers are found to be less important than other changes in explaining recent developments.
The study concludes with the question of how one might use econometric models to forecast immigration into the UK. It shows that point forecasts of immigration on the basis of econometric models, certainly a single model, are characterised by considerable uncertainties.
This is partly because there is significant uncertainty about the ''true'' model. But, it is also because there is a strong role for policy-related structural change and for policy vis-à-vis other countries, and policy changes are hard to predict ex ante.
"The Drivers of International Migration to the UK: A Panel-based Bayesian Model Averaging Approach'' by James Mitchell, Nigel Pain and Rebecca Riley is published in the December 2011 issue of the Economic Journal.