Labour market performance of immigrants: New evidence from linked administrative data

In this blog, ADR UK Research Fellow Dr Ezgi Kaya shares the stark differences she has found between long-term and recent immigrants in labour market outcomes.  

My project compares the labour market outcomes of immigrant workers and those born in the UK. When making such comparisons, it is crucial to consider observed differences among employees in personal and work-related characteristics, such as ethnicity, education, work region and length of employment within an organisation.

I am using de-identified administrative data from the Annual Survey of Hours and Earnings (ASHE) linked to the 2011 Census – England and Wales, accessed through the Office for National Statistics Secure Research Service. This dataset provides rich information on these characteristics and labour market outcomes, including hourly pay, weekly paid hours, occupation, and type of employment contract. This enables my analysis to account for the impact of differences in characteristics on labour market outcomes.

I define immigrants as individuals born outside the UK and categorise them based on their duration of residence in the UK: long-term immigrants (10 or more years) and more recent immigrants (less than 10 years).

Differences in labour market outcomes between long-term and recent immigrants in relation to UK-born workers

My analysis reveals stark differences between long-term and recent immigrants. Recent immigrants (with less than 10 years of residence) tend to earn less, work longer hours, and are more likely to hold low-skill occupations or temporary contracts compared to UK-born employees. These differences in labour market outcomes between recent immigrants and UK-born employees persist even after considering characteristics such as ethnicity, education, work region and length of employment within an organisation.

In contrast, long-term immigrants (10 or more years of residence) earn more on average and are less likely to work in low-skilled occupations than UK-born employees. However, these differences become insignificant when I consider differences in other characteristics including education and work region between long-term immigrants and UK-born employees.

Factors influencing labour market outcomes

My analysis highlights the significance of several key factors in understanding observed disparities between immigrants and UK-born workers. On average, immigrants have higher levels of education and are more likely to work in high-paying regions such as London compared to their UK-born counterparts. Consequently, the favourable labour market outcomes observed among long-term immigrants can be attributed to these factors.

These factors also play a role in narrowing the pay gap and differences in low-skill occupations between recent immigrants and UK-born workers. However, ethnic disparities partially offset these. Additionally, recent immigrants on average have a shorter length of employment within an organisation, which widens these differences.

My analysis shows that these observed differences in labour market outcomes are similar for both males and females. However, significant variations exist based on factors such as ethnicity, country of origin, reason for migration, and across the pay distribution.

You can read more about these findings in a discussion paper.

What’s next?

Significant disparities persist between recent immigrants and UK-born employees, highlighting the need for further investigation into the underlying causes. I will therefore look at other factors, including the role of individual employers. Previous evidence suggests that individual employers play an important role in shaping outcomes, particularly regarding gender and ethnicity disparities in the UK labour market.  

These findings also highlight the importance of considering the duration of immigrants' residence. Next, I will try to better understand the underlying drivers of observed disparities among immigrant groups. This analysis will focus on factors related to integration, including language proficiency, holding a UK passport, and self-defined national identity.

By addressing these knowledge gaps, my research aims to provide a comprehensive evidence base. This is essential for designing effective policy responses aimed at reducing labour market inequalities.

You can find more details about my project on the ADR UK project page and in my blog.

Read Ezgi’s discussion paper published by Global Labor Organization.