HM Treasury written question – answered on 19th September 2016.

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Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

To ask Her Majesty’s Government, further to the answer by Lord O’Neill of Gatley on 5 September (HL Deb, col 849–50), what assessment they have made of the impact of immigration on wage rates and productivity in the UK.

Photo of Lord O'Neill of Gatley Lord O'Neill of Gatley The Commercial Secretary to the Treasury

As noted in the 2012 report by the Migration Advisory Committee (MAC), the empirical literature suggests that the impact of migration on productivity may be mixed and heavily dependent on the type of migrant coming to the UK. Migrants may increase productivity either through a simple ‘batting average’ effect if they work in higher productivity roles relative to the average for non-migrants, or through increasing the productivity of UK workers through greater specialisation and knowledge transfer. In this report, the MAC established the key role played by skilled migrants in raising productivity. Further, the 2014 MAC report, ‘Migrants in low-skilled work’, found low skilled migrants have a neutral impact on UK-born employment rates, GDP per head and productivity. The impact of immigration on wage rates is also mixed, although a 2015 working paper by the Bank of England found an increase in the immigrant to native ratio has a small negative impact on average British wages.

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