The Impact Of Immigration On Migration Within Britain”s Regions

Displacement effects of immigration through inter-regional migration contribute to spreading labour market competition around the economy, according to new research by Professor Tim Hatton and Massimiliano Tani, published in the November 2005 Economic Journal.

Throwing a brick into a pond raises the water level everywhere, not just at the point where the brick plunged in. This might explain why it is difficult to observe the effects of immigration on earnings or unemployment by comparing one region with another. The study assesses the true labour market impact of immigration by investigating the relationship between immigration and migration between the regions of Britain. The reasoning is as follows. Suppose that when immigrants enter a local labour market, the competition for jobs causes other workers to look further afield, perhaps even to another region.

As a consequence, competition would be intensified not just in the region where immigrants settle but by a process of displacement it would place downward pressure on wages across the whole economy. But does immigration really have an effect on inter-regional migration? London seems the obvious case: about 40% of migrants go to London but London loses population and so others must be moving out.

But is this really cause and effect? Looking across all the regions of Britain since the early 1980s suggests a modest effect. This is because most regions have relatively little immigration. Focusing just on the southeast suggests that every 100 immigrants to a region ”crowds out” between 40 and 50 others. Thus there is evidence of displacement in places where immigration is substantial. That in turn suggests that the labour market effects of migration will be spread across the whole economy.

”Immigration and Inter-regional Mobility in the UK” by Tim Hatton and Massimiliano Tani is published in the November 2005 issue of the Economic Journal. Tim Hatton is at the Australian National University. Massimiliano Tani is at the University of New South Wales.

Tim Hatton

University of Essex and the Australian National University | +61 2 6125 3230 | tim.hatton@anu.edu.au