The long-term economic impact of reducing migration in the UK

Katerina Lisenkova, Marcel Merette, Miguel Sanchez-Martinez

Research output: Contribution to journal › Article

2 Citations (Scopus)

Abstract

This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration from hundreds of thousands to tens of thousands†as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. We undertake a simulation exercise to compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50 per cent. The results show that such a significant reduction in net migration has strong negative effects on the economy. By 2060 the levels of both GDP and GDP per person fall by 11.0 per cent and 2.7 per cent respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the effective labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.
LanguageEnglish
PagesR22-R30
Number of pages9
JournalNational Institute Economic Review
Volume229
Issue number1
Publication statusPublished - 31 Aug 2014

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Economic impact
Scenarios
Tax rate
Simulation
Population projections
Income tax
Factors
Labor income
CGE model
Government budget
Public finance
Exercise

Keywords

  • economic migration

Cite this

Lisenkova, K., Merette, M., & Sanchez-Martinez, M. (2014). The long-term economic impact of reducing migration in the UK. National Institute Economic Review, 229(1), R22-R30.
Lisenkova, Katerina ; Merette, Marcel ; Sanchez-Martinez, Miguel. / The long-term economic impact of reducing migration in the UK. In: National Institute Economic Review. 2014 ; Vol. 229, No. 1. pp. R22-R30.
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Lisenkova, K, Merette, M & Sanchez-Martinez, M 2014, 'The long-term economic impact of reducing migration in the UK' National Institute Economic Review, vol. 229, no. 1, pp. R22-R30.

The long-term economic impact of reducing migration in the UK. / Lisenkova, Katerina; Merette, Marcel; Sanchez-Martinez, Miguel.

In: National Institute Economic Review, Vol. 229, No. 1, 31.08.2014, p. R22-R30.

Research output: Contribution to journal › Article

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T1 - The long-term economic impact of reducing migration in the UK

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AB - This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration from hundreds of thousands to tens of thousands†as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. We undertake a simulation exercise to compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50 per cent. The results show that such a significant reduction in net migration has strong negative effects on the economy. By 2060 the levels of both GDP and GDP per person fall by 11.0 per cent and 2.7 per cent respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the effective labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.

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Lisenkova K, Merette M, Sanchez-Martinez M. The long-term economic impact of reducing migration in the UK. National Institute Economic Review. 2014 Aug 31;229(1):R22-R30.

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