Economic impacts of different skilled levels of immigration labour: a CGE assessment for the UK

Wu, Yinghong (2011) Economic impacts of different skilled levels of immigration labour: a CGE assessment for the UK. PhD thesis, Middlesex University. [Thesis]

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Abstract

The aim of this thesis is to make a comprehensive assessment of economic impacts of different skilled level of international immigration labour on the UK by using a multiregion, multi-sector CGE-ILA model as a tool, with four main extensions from the IFPRI standard CGE framework, namely, the four-level nested CES production
functions, highly disaggregated household data, two foreign regions and the assumption of imperfect labour market. The model is calibrated to a purpose-built 41x41 SAM
dataset for the UK 2004. By employing four sets of criterions, the analysis combines four skill-type of immigration labour to look at their impacts on the UK economy from six aspects:
economic growth, international trade, wage and unemployment, incomes of institutions, employment in sectors, production prices and scale of production. The main findings are:
1) The inflow of higher-skilled labour can make significant contribution to UK
economy and alleviate wage inequality; although lower-skilled immigration labour also has the positive effects on UK economy, they can worsen the wage inequality.
2) Only increase of small proportion (<8%) of highly-skilled immigration labour will reduce total unemployment.
3) Increase of immigration labour has positive effects on the incomes of all institutions, of which enterprises and government gain the larger benefit than households do.
The higher the skill of immigration labour has, the larger the contribution they will make.
4) The unskilled immigration labour has the larger positive effects on UK economy than the semi-skilled has, and has the positive impacts on reducing the activity
prices of the some sectors in the Primary and Secondary Industry, and then encourages more exports than imports.
5) The semi-skilled immigration labour is the least needed in the UK labour market, if the reduction of unemployment is the prior consideration.
Thus, the policy implication of the current study is that the highly-skilled immigration labour is urgently and largely needed by the UK economy; the recommended scale of
immigration labour is a mix with a large proportion of higher-skilled labour force and a small proportion of the lower-skilled.

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