Dr Julian Costas-Fernandez

In canonical models, the labour share is orthogonal to immigration shocks in the long run, regardless of the impact of immigration on productivity. In contrast, this paper provides evidence that immigration increases labour productivity while reducing the labour share. We produce this evidence using data from Great Britain with a shift-share instrument that exploits European Union expansions and changes in immigration to other high-income countries. Our results are consistent with the predictions from imperfect labour market models, where immigrant and native workers are heterogeneous in skills, and the former have lower labour supply elasticities than the latter. A significant implication of our analysis is that immigration redistributes income from workers to employers.

This paper offers new evidence of the role of immigration in shaping the educational and labour market outcomes of natives. We use administrative data on the entire English higher education system and exploit the idiosyncratic variation of foreign students within university-degree across four cohorts of undergraduate students. Foreign peers have zero to mild effects on natives' educational outcomes, such as graduation probability and degree classification. Significant effects are found on displacement across universities and degree types after enrolment, although these outcomes are rare occurrences. In line with the mild effects on education outcomes, we also find little evidence of foreign peers affecting early labour market outcomes of native graduates.