Estimating the local employment impacts of immigration : a dynamic spatial panel model

This paper highlights a number of important gaps in the UK evidence base on the employment impacts of immigration, namely: (i) the lack of research on the local impacts of immigration - existing studies only estimate the impact for the country as a whole; (ii) the absence of long term estimates –research has focussed on relatively short time spans – there are no estimates of the impact over several decades, for example; (iii) the tendency to ignore spatial dependence of employment which can bias the results and distort inference - there are no robust spatial econometric estimates we are aware of. We aim to address these shortcomings by creating a unique dataset of linked Census geographies spanning 5 Censuses since 1971. These yield a large enough sample to estimate the local impacts of immigration using a novel spatial panel model which controls for endogenous selection effects arising from migrants being attracted to high-employment areas. We illustrate our approach with an application to London and find that no migrant group has a statistically significant long-term negative effect on employment. EU migrants are found to have a significant positive impact. Our approach opens up a new avenue of inquiry into sub-national variations in the impacts of immigration on employment.