Essays on the effect of Brexit on UK productivity and labour markets
File(s)
Author(s)
Cai, Yinyin
Type
Thesis
Abstract
This thesis contributes to the literature by providing empirical evidence on the relationship between Brexit, immigration policy, productivity, and labour market dynamics in the UK.
The first chapter presents a review of the expanding literature on Brexit, focusing on two distinct themes: its overall significance and its effects on the UK labour market. I then analyse post-Brexit immigration trends and their impact on the labour market. The chapter concludes by outlining avenues for future research.
The second chapter examines the impact of Brexit on UK productivity, reflecting the widespread belief that Brexit has had, and continues to have, a detrimental effect on the UK economy. While much of the literature has focused on trade barriers, there is increasing interest in the constraints Brexit places on EU labour. I use a structural production function framework to assess whether restrictions on foreign labour could reduce regional productivity disparities. As foreign workers are concentrated in the most affluent areas, increased barriers were expected to impact those regions most. However, this effect depends not only on foreign worker shares but also on substitution possibilities and firms’ pricing power. My findings suggest that Brexit has exacerbated the productivity gap between UK regions.
The third chapter investigates the wage effects of the new points-based immigration system introduced in January 2021, which requires new EU migrants to meet a £25,600 salary threshold. I examine impacts across region-sectors, especially those previously reliant on low-wage EU workers. The results show that these sectors experienced less wage growth among UK workers, suggesting the hiring difficulties led to poorer outcomes for natives, contradicting claims that Brexit would raise domestic wages. While relaxed rules for non-EU workers increased business demand for UK workers, this effect was smaller and less robust.
The first chapter presents a review of the expanding literature on Brexit, focusing on two distinct themes: its overall significance and its effects on the UK labour market. I then analyse post-Brexit immigration trends and their impact on the labour market. The chapter concludes by outlining avenues for future research.
The second chapter examines the impact of Brexit on UK productivity, reflecting the widespread belief that Brexit has had, and continues to have, a detrimental effect on the UK economy. While much of the literature has focused on trade barriers, there is increasing interest in the constraints Brexit places on EU labour. I use a structural production function framework to assess whether restrictions on foreign labour could reduce regional productivity disparities. As foreign workers are concentrated in the most affluent areas, increased barriers were expected to impact those regions most. However, this effect depends not only on foreign worker shares but also on substitution possibilities and firms’ pricing power. My findings suggest that Brexit has exacerbated the productivity gap between UK regions.
The third chapter investigates the wage effects of the new points-based immigration system introduced in January 2021, which requires new EU migrants to meet a £25,600 salary threshold. I examine impacts across region-sectors, especially those previously reliant on low-wage EU workers. The results show that these sectors experienced less wage growth among UK workers, suggesting the hiring difficulties led to poorer outcomes for natives, contradicting claims that Brexit would raise domestic wages. While relaxed rules for non-EU workers increased business demand for UK workers, this effect was smaller and less robust.
Version
Open Access
Date Issued
2024-08-29
Date Awarded
01/07/2025
License URL
Advisor
Rosa Dias, Pedro
Martin, Ralf
Publisher Department
Business School
Publisher Institution
Imperial College London
Qualification Level
Doctoral
Qualification Name
Doctor of Philosophy (PhD)