The Truth about Undercutting: Migration and Its Long-Term Impact upon Labour Market Outcomes of White British and Minority Workers

Increasing migration is often blamed for affecting British jobs negatively, through undercutting their earnings and/or conditions of work. Politicians from both the left and right are eager to address these concerns, which dominate public discourse. This negative view is not necessarily supported by research however which shows an overall positive effect on earnings; although the pay of workers at the bottom is negatively affected. This paper studies different aspects of work, including the security and tenure of work and job quality to build a comprehensive picture of the impact of migration. Importantly, we control for characteristics of the regional labour markets and occupational segregation.

We make use of longitudinal data from the British Household Panel Study and Understanding Society to study how sectoral changes in exposure to migrants, estimated from the UK Labour Force Survey, shape labour market experiences of individuals over time. We make use of the inflow of migrants due the eastwards expansions of the European Union in 2004 and later in 2007 when access to Romanian and Bulgarian migrants was limited to self-employment and certain sectors up until 2014. We use this exogenous variation in migrant inflows, which affected areas with pre-existent migrant communities more, to estimate the long-term effect on individuals’ career using difference-in-difference and longitudinal methods. We pay specific attention to the question of who is being affected by increasing migrant inflows as migrants may not be perfect substitutes for the majority, in which case the majority may benefit from an inflow of migrants, while more vulnerable groups such as ethnic minorities and other migrants suffer from the increased competition. Preliminary results indicate that an increase in migrant exposure in the regional sector leads to lower job security and worse employment conditions.