In Light of the Brexit: a Sectoral Employment Analysis of the UK Labour Market after the EU Enlargement of 2004

Who needs migrants? In the run up to the Brexit referendum, immigration of EU migrants to the UK was among the fiercest debated themes, in particular concerning migrants from the post 2004 EU Accession countries. Using local authority data, this thesis examines how the UK labour market behaves when buffeted with a labour supply shock from these countries. It assesses how unemployment rates developed and further dissects the analysis to how sectoral employment rates responded to such shock by calculating elasticities using spatial correlation regressions. This thesis finds that the UK labour market does not necessarily behave according to simple textbook models. These textbook models predicts an increase in total employment under inflows of migration, yet when regressing using spatial correlations overall unemployment rates showed a very slight increase under increased immigration. Sectoral employment regressions show that agriculture employment experienced a very slight decrease too. There is no evidence that immigration had an effect on manufacturing employment. Transport employment did behave according to textbook models, a slight increase of employment was observed under inflows of migrants. Magnitudes of the effects of immigration on the UK labour market are tiny, unlike its impact on public perception.