The Effects of Eastern European Migration in Wales Sara Lemos, University of Leicester July, 2009 The enlargement of the European Union in May 2004 triggered a rapid, concentrated and relatively large migration inflow into Wales. As this inflow was concentrated into narrow areas and occupations, it can be seen as a natural experiment that arguably corresponds closely to an exogenous supply shock. We exploited this natural experiment to separately identify the effect of the migration shock from the effect of other supply and demand shocks on unemployment and wages. We found little evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in Wales between 2004 and 2006. In particular, we found no evidence of an adverse impact on young, female or low-skilled claimant unemployment and no evidence of an adverse impact on the wages of the low-paid. If anything, we found a positive effect on the wages of higher paid workers and some weak evidence of a potentially favourable impact on claimant unemployment. JEL classification: J22. Keywords: migration, employment, wages, Central and Eastern Europe, UK, Wales. *University of Leicester, Economics Department, University Road, Leicester LE1 7RH, England, +44 (0)116 252 2480, +44 (0)116 252 2908 (fax),
[email protected]. Special thanks to Barry Chiswick, Carlos Carrillo-Tudela, Gianni De Fraja, Jonathan Portes and Kevin Lee in earlier versions of this work. We acknowledge and thank the financial support of the Welsh Assembly Government. We are also grateful for the data provided by the UK Border Agency through the Freedom of Information Act 2000.