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The long-term macroeconomic effects of lower migration to the UK

Author

Listed:
  • Katerina Lisenkova
  • Miguel Sanchez-Martinez

Abstract

This paper looks at the possible scenarios of migration policy should the UK leave the EU. The paper uses an OLG model which brings together labour market, fiscal and other macroeconomic effects in one framework. It also adds a dynamic perspective, differentiates between natives and different categories of immigrants and captures age and qualification compositional effects. The paper compares the two migration scenarios: Leave and Remain. By 2065, in the Leave scenario, aggregate GDP and GDP per person are 9% and 1% respectively lower compared to Remain scenario. Reduced migration after leaving the EU has a negative impact on the public finances, because of higher dependency ratio. This requires an increase in taxation of about £400 per person (2014 pounds) in 2065. The results are sensitive to the assumptions that change productivity of the labour force and dependency ratio.

Suggested Citation

  • Katerina Lisenkova & Miguel Sanchez-Martinez, 2016. "The long-term macroeconomic effects of lower migration to the UK," National Institute of Economic and Social Research (NIESR) Discussion Papers 460, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:460
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    References listed on IDEAS

    as
    1. Baas, Timo & Brücker, Herbert, 2012. "The macroeconomic consequences of migration diversion: Evidence for Germany and the UK," Structural Change and Economic Dynamics, Elsevier, vol. 23(2), pages 180-194.
    2. Ray Barrell & John Fitzgerald & Rebecca Riley, 2010. "EU Enlargement and Migration: Assessing the Macroeconomic Impacts," Journal of Common Market Studies, Wiley Blackwell, vol. 48(2), pages 373-395, March.
    3. Ray Barrell & John Fitzgerald & Rebecca Riley, 2010. "EU Enlargement and Migration: Assessing the Macroeconomic Impacts," Journal of Common Market Studies, Wiley Blackwell, vol. 48(2), pages 373-395, March.
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    Citations

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    Cited by:

    1. Begg, Iain, 2016. "Brexit: why, what next and how?," LSE Research Online Documents on Economics 68861, London School of Economics and Political Science, LSE Library.
    2. Augustine O. Ifelebuegu & Kenneth E. Aidelojie & Elijah Acquah-Andoh, 2017. "Brexit and Article 50 of the Treaty of the European Union: Implications for UK Energy Policy and Security," Energies, MDPI, vol. 10(12), pages 1-15, December.
    3. Iain Begg, 2016. "Brexit: Why, What Next and How?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(1), pages 30-36, August.
    4. Angus Armstrong & Justin Van de Ven, 2016. "The Impact of Possible Migration Scenarios after ‘Brexit’ on the State Pension System," Economies, MDPI, vol. 4(4), pages 1-13, October.
    5. Iain Begg, 2016. "Brexit: Why, What Next and How?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(02), pages 30-36, August.

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    More about this item

    Keywords

    UK; migration; OLG; population ageing;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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