Transcript title author date place

Labor Mobility and the Integration
of European Labor Markets
EU Labor Markets after Post-Enlargement Migration
Prof. Dr. Klaus F. Zimmermann
IZA, DIW Berlin und Bonn University
Higher School of Economics (HSE), Moscow
April 7, 2010
2
Background
• Migration is an integral part of Europe’s past and present
• EU Enlargement
– May 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovakia and Slovenia joined the EU (EU10)
– January 2007: Bulgaria and Romania (EU2)
• The EU eastern enlargements were unprecedented in several ways:
– CEECs: political and economic transformation
– In general, no free migration to the West after the WWII until the fall of
the Iron Curtain
– Significant income and unemployment differentials
– Substantial population size
• This all contributed to the sensitivity of the migration topic in the
European public and policy discourse
3
Policy reaction: Transitional arrangements
• Pre-enlargement fears: mass migration, “welfare tourism” and
displacement effects in the labor markets
• Transitional arrangements on the free movement of workers from
CEECs for up to 7 years based on the “2+3+2” formula adopted
• 2004 Enlargement:
– In 2004: only Ireland, the UK and Sweden opened up their LMs
– Currently: France, Spain, Finland, Greece, Portugal, Italy, the
Netherlands, Luxembourg, Belgium and Denmark provide free access
to EU8
– Austria and Germany have simplified the procedures but announced
that the will apply transitional measures until 2011
• 2007 Enlargement:
– Only Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Poland,
Slovenia, Slovakia, Finland and Sweden have opened up their LMs for
EU2
– Spain, Greece, Hungary and Portugal opened up in the second phase,
Denmark followed the suit on May 1, 2009
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Theory: Should we fear migration?
• Migration generally benefits the economy:
– Improves the allocative efficiency of labor markets
– Brain circulation facilitates international trade, transfer of technologies
and knowledge, and eliminates bottlenecks to economic development
• Free movement benefits the migrants themselves
• Redistributive effects
– Skilled immigration benefits unskilled and may hurt skilled native
workers
– Unskilled immigration hurts unskilled and may benefit skilled native
labor
– Correspondingly for skilled and unskilled emigration
– Skilled immigration reduces inequality
• Effects on public finance
• A priori: No fear, but let us look at the empirics!
5
Post-enlargement migration: The receiving countries
• In general, we observe an increase in migrant inflows
from both EU10 and EU2 after EU enlargement ...
• ... but there is substantial heterogeneity:
– Share of EU10 increased remarkable in Ireland, UK and
Luxembourg due to free mobility
– Migrants from the EU2 continued to go predominantly to Italy
and Spain
• Nonetheless, the proportion of non-EU27 nationals in the
EU15 remains larger than that of migrants from the new
member states
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Share of EU8 foreign nationals resident in the EU15
EU8: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia
4.5
Share increased remarkable
in Ireland, UK and Luxembourg
due to free mobility
4
3.5
3
2000
2.5
2003
2
2007
1.5
1
0.5
15
EU
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0
Source: Brücker and Damelang (2009).
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Share of EU2 foreign nationals resident in the EU15
EU2: Bulgaria and Romania
2
1.8
1.6
Migrants from the EU2 continued to
go predominantly to Italy and Spain
1.4
1.2
2000
1
2003
0.8
2007
0.6
0.4
0.2
15
EU
K
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Source: Brücker and Damelang (2009).
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Share of foreign nationals resident in the EU15
14
The proportion of non-EU27
nationals in the EU15 remains
larger than that of migrants
from the new member states
12
10
Non-EU27
8
EU2
EU10
6
EU15
4
Note:
EU10 = EU8 + Cyprus and Malta.
Source:
European Commission (2008).
2
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Post-enlargement migration: The sending countries
• Increase in emigration between 2000 and 2007 in both
EU8 and EU2 countries
• Emigration rates
– Highest: Romania, Bulgaria, Lithuania, Poland, Estonia, Slovakia
– Lowest: Czech Republic and Hungary
• Poland
– Increased emigration, relative shift from Germany to the UK
– The number of Poles who stayed abroad for at least two months
has tripled since early 2004 till early 2007 from around 180,000
to around 540,000
– Emergence of two distinct emigrant groups – low-skilled
individuals from the periphery and highly-skilled ones from the
cores
10
Post-enlargement migration: The sending countries
Share of sending countries foreign nationals resident in the EU15
8
EU10: LT, PL, EE, SK
EU2: RO, BG
7
6
5
2000
4
2003
2007
3
2
1
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How do the post-enlargement migrants fare? (I)
• Greater labor market participation and higher employment rates than
the populations in either the sending or receiving countries
– Exceptions: recent EU8 immigrants in Germany exhibit lower
employment and participation rates
• After enlargement among EU8 migrants
– Higher employment rate
– Lower unemployment and inactivity rates
– Exception: Germany
• Self-employment rate
– Low among recent EU10 immigrants in the UK
– High among EU2 immigrants in the UK (50%) and among recent EU10
migrants in Germany (40%)
– => self-employment a way to circumvent transitional arrangements!
12
How do the post-enlargement migrants fare? (II)
• NMS immigrants overrepresented in low and medium-skilled
sectors and occupations
• But relatively well educated
– Almost a quarter of EU8 immigrants have high education,
majority medium
– EU2 immigrants less educated than EU8 immigrants
– The proportion of highly educated migrants from the EU8 is
lower for post-enlargement arrivals; but also the share of the
less-skilled has declined. Improvement on average
• Transitional arrangements imply negative selection
– In the UK post-enlargement EU8 immigrants MORE educated
– In Germany post-enlargement EU8 immigrants LESS educated
• Predominantly temporary (self-reported), males (but females
in Germany), young
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• Unemployment
rates:
• Labor cost
index:
No disruptions
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The effects of migration: Any disruptions in EU15?
12
10
8
6
4
2
0
160
EU15
Germany
Germany
Ireland
Ireland
Sweden
UK
140
120
100
80
60
40
20
0
UK
14
The effects of migration: Any negative effects in EU15?
• In general, no negative impact on receiving countries’ wages,
unemployment or employment, or the welfare systems
• The UK
– No impact on unemployment rate or wages, even after controlling for
potential observable and unobservable confounding factors
– Perhaps some negative effect on the relative wages of the least skilled
– It is rather the “fear of unemployment” that has risen in response to
immigration from the new member states and that may suppress
inflationary pressures
– The number of EU8 nationals applying for UK social benefits is low,
and child benefits constitute the largest category.
– Immigrants generally fill gaps in labor supply
• Ireland
– Similarly no negative effects, no “welfare tourism”, even if displacement
took place in some sectors, since no rise in aggregate unemployment,
“upgrade” jobs for nationals
15
The effects of migration: Models using calibrations
•
EU as a whole
– Substantial positive effects in terms of GDP, GDP per capita, productivity and
wages; and a somewhat smaller effect for employment in the long run
– GDP (and GDP per capita) will increase by about 0.1 percent in the short run
and by about 0.2 percent in the long run
– Long-run impact corresponds to a sum of 24 billion Euros
(i.e., 28,571 Euros per post enlargement migrant)
•
EU15
– A decline in wages by 0.08-0.09 percent and an increase in unemployment
by 0.04-0.06 percent in the EU15 in the short run, but no significant effects in the
long run
– Increase in GDP and small increase in employment, but GDP per capita decreases
•
EU8 (EU2)
– GDP declines (people leave), but there are gains for real wages, productivity and
GDP per capita as well as a decrease in employment
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No disruptions
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• Unemployment
rates:
C
The effects of migration: Any disruptions in NMS?
20
18
16
14
12
10
8
6
4
2
0
2007
500
450
400
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100
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0
2007
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The effects of migration: Any negative effects in NMS?
• Generally, aggregate data document decreasing
unemployment, increasing number of vacancies, and
employment growth, as well as increasing wages in the postenlargement period
• Outflow of skilled migrants generates shortages and may put
strain on social security
• There was no incidence of massive “brain-drain” from the new
member states, although in some sectors (such as health
care) the emigration of highly skilled specialists was relatively
large. Brain circulation expected in the long run
Some risks, but positive
developments and outlook
18
Remittances
• Remittances constitute a significant part in Bulgaria’ and
Romania’s GDPs and are also important in the Baltic States.
• Mostly of seasonal nature in Poland and the Baltic states
• Largely used for household consumption and purchase of
durable goods with a recent tendency to invest in human
capital, particularly tertiary education
• The impact of these remittances on the economic
development so far is rather limited
19
The Case of Germany
•
Pre-enlargement fears: mass migration, “welfare tourism” and displacement
effects in the labor market
•
Transitional arrangements:
– Germany has not opened up its labor market to workers from new member states
– Self-employed workers from the EU8 are allowed to settle in Germany and run a
business. However, they may not employ workers from their home country.
•
January 1, 2009: Opening to high-skilled workers, but the generally strong
negative signals may nullify its effectiveness
•
Despite these arrangements, the numbers of migrants from the accession
countries have clearly increased in Germany since the 2004 enlargement
•
The net flow of EU8 immigrants has become 2.5 times larger
than in the four-year period before enlargement
•
Without the immigration from the EU8, Germany would have had a net loss
of migration
20
Net annual immigration to Germany by region of origin
140000
EU accession countries 2004
120000
EU accession countries 2007
Old EU member states
100000
Non-EU countries
Germany
80000
60000
40000
20000
0
-20000
-40000
Immigration from EU8 has
increased after EU enlargement
-60000
2000
2001
2002
2003
2004
2005
2006
21
Composition of immigrants in 2007
• The total number of immigrants between the age of 15 and 65
in Germany at the end of 2007 was close to 5.5 million, or
approximately 10% of the total population in that age group.
• Immigrants from EU8 countries constituted only 9.3% of all
immigrants at the end of 2007 (24.6% of the 5.5 million are
from EU15 countries, 24.1% from Turkey, 13.2% from the
former Yugoslavia, 5% from the ex-Soviet Union, 20.1% from
outside of Europe)
• Among EU8 immigrants, Poles constitute the largest net
immigrant group: after enlargement, 71% of EU8 immigrants
and 63% of all immigrants came from Poland
22
The stock of EU8 immigrants in 2006
by year of arrival and gender
0.17
0.19
0.18
0.16
0.17 0.13
0.13
0.10
EU8-female
0.12
0.07
0.10
0.08
0.05 0.04
0.03 0.03
2004-2006
2001-2003
1998-2000
1995-1997
1989-1991
1986-1988
0.01
0.06
0.03
1983-1985
0.01
1974-1976
0.01
0.04
1980-1982
0.01
0.02
0.01
1977-1979
0.02
1992-1994
0.06
0.00
EU8-male
0.14
0.12
0.04
0.19
0.12
0.14
1971-1973
Percentage of Population by Gender
0.20
Mostly female,
but difference
has decreased
after the EU
enlargement
Year of Arrival
23
Average years of schooling of male immigrants
by year of arrival and country of origin
15.5
15
13.88
14
13.45
13.56
13.39
13.38 13.33
13.5
12.80
13
12.5
12
12.80
12.42
12.32
EU8-male
11.87
11.80
NonEU-male
11.5
EU15-male
Year of Arrival
2004-2006
2001-2003
1998-2000
1995-1997
1992-1994
1989-1991
1986-1988
1983-1985
1980-1982
1977-1979
1974-1976
11
1971-1973
Years of Schooling
14.5
EU8-males’
education
declines after the
EU enlargement
(absolutely and relatively)
24
Average years of schooling of female immigrants
by year of arrival and country of origin
15.5
15
13.71
14
13.28 13.35
13.5
13.60
13.52 13.44 13.51
13.41
13.69 13.77
13.10
13
12.5
EU8-female
12
NonEU- female
11.5
EU15-female
Year of Arrival
2004-2006
2001-2003
1998-2000
1995-1997
1992-1994
1989-1991
1986-1988
1983-1985
1980-1982
1977-1979
1974-1976
11
1971-1973
Years of Schooling
14.5
EU8-females’
education
declines after the
EU enlargement
(relatively)
25
Changes in the composition and labor market outcomes
of EU8 immigrants since the EU enlargement
• The composition of EU8 immigrants to Germany has changed
since the EU enlargement:
– Recent immigrants are comparably older and have lower levels of
education
– The migration flow after the EU enlargement has consisted mostly of
Polish migrants, especially men, who have moved to Germany, and
migrants from the EU8, which have exhibited large fluctuations
– The most significant group is aged between 25 and 45
• But also the labor market outcomes of EU8 immigrants have
changed
since the EU enlargement:
– They work in low-paid jobs and work longer hours
– Their net monthly income is the lowest on average among all immigrant
groups except recent non-EU immigrants
– They are 23.1% less likely to be employed than natives
– They have the lowest labor force participation rate among
all immigrant groups except recent non-EU immigrants
– However, they are 15.7% more likely to be self-employed than natives
26
Net effects of being an immigrant
(before and after the enlargement)
Recent EU8
immigrants:
- lower income,
- lower wages,
- and lower
employment
probability,
- but more
likely to be
self-employed
27
Consequences: The failure of continued
mobility restrictions in Germany
• The analysis of the immigrants’ composition suggests that
recent EU8 immigrants are more likely to compete with
immigrants from outside Europe for low-skilled jobs than with
natives in Germany
• Self-employment seems to have been used as a means to
circumvent transitory arrangements in Germany
• Although Germany needs high-skilled immigrants, recent
immigrants from the EU8 only replace non-EU immigrants in
low-skilled jobs
• This underlines the importance of more open immigration
policies targeting high-skilled immigrants
• The current German policy not only fails to attract the required
high-skilled workforce, but is also unable to avoid the
attraction of low-skilled immigrants
A missed opportunity!
28
The current economic crisis
• Deterioration of most aggregate variables
• Slow down of migration flows
• Many migrants may return home
–
–
–
–
Economic reasons (job loss)
No restrictions on movement
Temporary intentions
Social pressure fuelled by economic difficulties in the destination
countries
– Shrinking social (ethnic) networks
– Overqualified workers may prefer returning home
• However:
– Crisis hits both destination and source countries, and some source
countries possibly even harder
– East-west migration flows may thus continue despite the crisis,
but their composition might change
29
Concluding remarks: Receiving countries
• Migration from the new member states to the old EU15
has increased after the 2004 and 2007 enlargements
• “Migration diversion” effect into countries that opened
labor markets (UK, IRL, ES, IT)
• But “closed” economies also experienced increased
immigration after the enlargement (AT, DE)
• Some evidence that migration diversion occurred through
migrants’ characteristics.
• No evidence on negative impact on the receiving countries’ labor
markets in terms of wages, employment, or unemployment
• No evidence on negative impact of post-enlargement migration
on public budgets or “welfare tourism”
30
Concluding remarks: Sending countries
• In the long-run:
– Large outflows of young and skilled individuals may have
negative impacts on countries’ economic growth, demographic
situation and public budget
– However, the temporary nature of these flows implies braincirculation and thus positive effects overall
• In the short-run:
– Decreased unemployment
– Labor shortages and increasing number of vacancies (mismatch
between vacancies and workers)
– Employment growth
– Upward pressure on wages
– Remittances large but their effect so far limited
31
Future challenges
• Will many more people decide to leave new member states
for the old ones, or will the numbers stabilize at much lower
figures than current?
• What will the composition of migration flows be like?
• What will be the timing, duration and frequency of migrants’
stays abroad?
• How the transitory arrangements have affected the postenlargement migration flows and their repercussions?
• How to ensure that free mobility in the EU it is upheld in all
aspects, that it contributes to economic prosperity as well as
the well-being of the individual and the society, and that it
helps to alleviate economic and financial disturbances such
as the ongoing economic crisis, is a major policy task for the
present and future
32
Recent publications on the topic
• Klaus F. Zimmermann and
Martin Kahanec (eds.):
EU Labor Markets after
Post-Enlargement Migration,
Berlin et al.: Springer, 2009
• Klaus F. Zimmermann and Martin Kahanec (2009):
International Migration, Ethnicity and Economic Inequality,
in: Salverda, Nolan and Smeeding (eds.), The Oxford
Handbook of Economic Inequality, Oxford University Press
• Klaus F. Zimmermann (2009): Labor Mobility
and the Integration of European Labor Markets,
IZA Discussion Paper No. 3999, Bonn
33
Prof. Dr. Klaus F. Zimmermann
IZA, DIW Berlin und Universität Bonn
IZA, Postfach 7240,
53072 Bonn
Telefon: +49 (0) 228 - 38 94 -0
Fax: +49 (0) 228 - 38 94 180
E-Mail: [email protected]
www.iza.org