The Impact of Immigration on the Structure of Wages: Theory and Evidence from Britain

45 Pages Posted: 19 Jul 2010

See all articles by Marco Manacorda

Marco Manacorda

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Queen Mary, University of London; Centre for Economic Policy Research (CEPR)

Alan Manning

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Jonathan Wadsworth

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); IZA Institute of Labor Economics; William Davidson Institute; Royal Holloway College University of London

Date Written: June 2010

Abstract

Immigration to the UK, particularly among more educated workers, has risen appreciably over the past 30 years and as such has raised labor supply. However studies of the impact of immigration have failed to find any significant effect on the wages of native-born workers in the UK. This is potentially puzzling since there is evidence that changes in the supply of educated natives have significant effects on their wages. Using a pooled time series of British crosssectional micro data on male wages and employment from the mid-1970s to the mid-2000s, this paper offers a resolution to this puzzle, namely that in the UK natives and foreign born workers are imperfect substitutes. We show that immigration has primarily reduced the wages of immigrants - and in particular of university educated immigrants - with little discernable effect on the wages of the native-born.

Keywords: Immigration, Returns to education, Wages

JEL Classification: J6

Suggested Citation

Manacorda, Marco and Manning, Alan and Wadsworth, Jonathan, The Impact of Immigration on the Structure of Wages: Theory and Evidence from Britain (June 2010). CEPR Discussion Paper No. DP7888. Available at SSRN: https://ssrn.com/abstract=1640410

Marco Manacorda (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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Queen Mary, University of London

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Alan Manning

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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London WC2A 2AE
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(44 20) 7955 6078 (Phone)

Jonathan Wadsworth

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
England

IZA Institute of Labor Economics

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William Davidson Institute

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Royal Holloway College University of London

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