Macroeconomic Determinants of International Migration to the UK (with Jonathan Portes, King's College London)
This paper examines the determinants of long-term international migration to the UK. Using the same survey-based immigrant inflow data the British government employs for policy purposes, we first provide an analysis of the reliability of such data source and then explore the extent to which migration is driven by macroeconomic variables (GDP per capita, unemployment rate) as well as law and policy (the existence of “free movement” rights for EEA nationals). We find a very large impact from free movement within the EEA. We also find that macroeconomic variables – UK GDP growth and GDP at origin – are significant drivers of migration flows; evidence for the impact of the unemployment rate in countries of origin, or of the exchange rate, however, is weak. We conclude that, while future migration flows will be driven by a number of factors, macroeconomic and otherwise, Brexit and the end of free movement will result in a large fall in immigration from EEA countries to the UK. As a byproduct of our analysis, we include recommendations for improvement to the migration data sources used by the government: in particular, 'If the Government still stands by its aim of reducing net migration to the tens of thousands, it might prefer doing so using a source that does not have a standard error in the order of the tens of thousands.' (p. 20). The time is right for information held by the HMRC and the DWP to become the administrative source the UK has long lacked in both policy and research.