Jumana Saleheen

The Impact of Immigration On Occupational Wages: Evidence from Britain

This paper asks whether immigration to Britain has had any impact on average wages. There seems to be a broad consensus among academics that the share of immigrants in the workforce has little or no effect on the pay rates of the indigenous population. But the studies in the literature have typically not refined their analysis by breaking it down into different occupational groups. In this paper we find that once the occupational breakdown is incorporated into a regional analysis of immigration in Britain, the immigrant-native ratio has a significant, small, negative impact on average wages. Closer examination reveals that the biggest impact is in the semi/unskilled services sector. This finding accords well with intuition and anecdote, but does not seem to have been recorded previously in the empirical literature.

A Kalman Filter Approach to Estimating the UK NAIRU

In this paper, the Kalman filter method is applied to UK Phillips-curve models and estimates are derived for the NAIRU from 1973 to 2000. The resulting profiles suggest that the NAIRU peaked around the mid-1980s and fell back thereafter. Structural changes in the labour market have reduced inflationary pressure from that source, and we suggest that temporary effects from real import prices and real oil prices were an important additional downward influence on inflation in the latter half of the 1990s. Some of the uncertainties around our NAIRU estimates are shown. But, even though there may be uncertainty about exactly where the NAIRU is, a variety of models suggest that unemployment was below the NAIRU for much of the second half of the 1990s.

Labour supply as a buffer: evidence from UK households

This paper examines labour supply adjustment – both hours worked and participation decisions. The analysis focuses on the response of each to financial shocks, employing data from the British Household Panel Survey. Results suggest that employees whose financial situation deteriorates relative to what they expected, increase their labour supply in response. That response is consistent with models of self-insurance that incorporate labour supply flexibility. The shock reflects several factors including financial wealth and a partner’s employment situation. The response is significantly larger for those who change job, consistent with the importance of hours constraints within jobs. The propensity to participate in the labour market also appears to respond to the financial shock but that is somewhat less robust than the hours response.

Tailwinds from the East: How Has the Rising Share of Imports from Emerging Markets Affected Import Prices?

This paper quantifies the effect of the rising share of imports from emerging market economies (EMEs) on import price inflation in the United Kingdom. It does so using a panel regression approach that accounts for heterogeneity across industries. The key finding is that the rise in China’s import share between 1999 and 2011 is estimated to have lowered UK import price inflation by around 0.5 percentage points per year over the same period – we call this the ‘tailwind from China’. Rising imports from other EME country groups are not found to have any significant impact. Our approach allows us to go further and say that two thirds of the China tailwind arises from the direct impact of importers ‘switching’ to lower cost Chinese goods; the remaining third comes from other exporters lowering their prices in response to strong competition from China. We find no evidence that higher inflation rates in EMEs have so far reduced or reversed the sign of the tailwind yet.