The tide on public sentiment towards immigration in the UK – and economists’ views on Brexit’s economic impact – may be turning. This column discusses the UK’s post-Brexit migration system introduced in January 2021. It argues that the new system, while ending free movement with the EU and hence being far more restrictive for EU citizens moving to the UK for work, is considerably less restrictive.
Migration
Labour mobility is a key criterion for assessing optimum currency areas. To smooth country-specific shocks or business cycles in currency unions, it is key that people migrate across the countries or regions of the union. This column argues that the ongoing discussion about risk sharing in the euro area neglects the issue of labour mobility. Relative to the US, migration rates in the euro area are significantly lower and migration contributes less to overall risk sharing. It calls for a renewed focus on the principle of labour mobility in order to enhance risk sharing in the euro area.
Better communications, enhanced transport links, integration agreements between governments, and other factors have all helped increase global economic interconnectedness over the past few decades. This column compares a state-of-the-art gravity model for trade versus migration to reveal that there are in fact important differences in the evolution of globalisation over time on flows of goods versus people. For trade, the boost from free trade agreements declines the farther apart signatories are, but for migration the boost increases with distance between signatories. Further, while both border and distance frictions have declined for trade over time, this is not the case for migration flows.
Attracting international students is critical for public universities in the UK increasingly facing funding cuts and a diminishing domestic youth population. This column discusses how Brexit may have affected students’ willingness to study in the UK and the factors likely driving the students’ choices. Brexit significantly lowered applications from EU students, especially for science, technology, engineering and mathematics subjects and for more selective institutions. International student enrolments also dropped, substantiating concerns regarding the ability to attract international talent.
The COVID-19 pandemic has led to a dramatic rise in protectionism and restrictions around the world. This column sheds light on the role migration can play in restoring globalisation in the wake of COVID-19. It draws upon evidence from macro-, sub-national, and micro-level research to demonstrate that migration has the potential to promote economic recovery through facilitating foreign trade, investment, and offshoring. The findings carry implications not only for physical migration, but also for whether or not recent technological advances may enable foreign-based online workers to promote globalisation.
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