New Labour? The Impact of Migration from Central and Eastern European Countries on the UK Labour Market

Abstract

The UK was one of only three countries that granted free movement of workers to accession nationals following the enlargement of the European Union in May 2004. The resulting large, rapid and concentrated migration inflow can be seen as a natural experiment that arguably corresponds closely to an exogenous supply shock. We evaluate the impact of this migration inflow – one of the largest in British history – on the UK labour market. We use new monthly micro level data and an empirical approach that ascertains which particular labour markets in the UK – with varying degrees of natives' mobility and migrants' self-selection – may have been affected. Our results suggest modest effects throughout the labour market. Despite anecdotal evidence, we found little hard evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in the UK between 2004 and 2006.

Keywords: wages, employment, migration, Central and Eastern Europe, UK

JEL Classification: J22