Talk: Katerina Lisenkova (with Mérette M. and Sanchez-Martinez M.): "The Long-Term Economic Impact of Reducing Migration in the UK" - Thursday, July 16th, 4pm
Wednesday, 1. July 2015
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%. 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% and 2.7% 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.
Partners
This project has received funding from the European Union's Seventh Framework Programme for research, technological development and demonstration under grant agreement no 613247.