Fear, Unemployment and Migration

Abstract

In this speech, Professor David Blanchflower, member of the Monetary Policy Committee (MPC), looks at the impact on the UK economy of the recent wave of migration from Eastern Europe, following the accession of ten new countries to the EU. He estimates that on aggregate, the inflow of workers has increased potential supply more than demand, thereby reducing inflationary pressures. While their arrival is found to have lowered wage inflation among the least skilled, he finds scant evidence that the increase in unemployment (and in particular youth unemployment) that has been experienced in the United Kingdom is related to the influx. In spite of the latter, he finds evidence of an increased fear of unemployment in both the United Kingdom and Ireland - the other major country to have experienced a big increase in migration from the A10 - since accession.