[ 1 ] MIGRATION AND PRODUCTIVITY. LESSONS FROM THE UK-SPAIN EXPERIENCES This project is funded by...
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Transcript of [ 1 ] MIGRATION AND PRODUCTIVITY. LESSONS FROM THE UK-SPAIN EXPERIENCES This project is funded by...
[ 1 ]
MIGRATION AND PRODUCTIVITY. LESSONS FROM THE UK-SPAIN EXPERIENCES
This project is funded by the European Commission, Research Directorate General as part of the 6th Framework Programme, Priority 8, “Policy Support and Anticipating Scientific and Technological Needs”
M. KANGASNIEMI (NIESR)
M.MAS (IVIE & U. VALENCIA)
K. ROBINSON (NIESR)
L. SERRANO (IVIE & U. VALENCIA)
Brussels, March 16th 2007
[ 2 ]
Objectives
• To analyze the impact of migration on productivity growth,
• Comparing two complementary experiences:• Spain: with a very recent presence of migrants• UK: traditional recipient of migration flows *
• From three perspectives:• Impact on GDP per capita. Alternative Scenarios• Growth Accounting• Econometric estimates
* The UK data on migrants are based on the Labour Force Survey micro data, access was provided by the UK Data Archive whose assistance is gratefully acknowledged.
[ 3 ]
MIGRATION AND PRODUCTIVITY
BASIC FACTS
[ 4 ]
MIGRATION AND PRODUCTIVITY. BASIC FACTS
Graph 1. Percentage of migrants in total employment. Spain & UK
0%
2%
4%
6%
8%
10%
12%
14%1
98
7
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
UK Spain
[ 5 ]
MIGRATION AND PRODUCTIVITY. BASIC FACTS
Table 2b. Working Age Population/Total. UK
70,00%
75,00%
80,00%
85,00%
90,00%
95,00%
Nationals Migrants
Graph 2a. Working Age Population/Total SPAIN
70.00%
75.00%
80.00%
85.00%
90.00%
95.00%
Nationals Migrants
[ 6 ]
MIGRATION AND PRODUCTIVITY. BASIC FACTS
Graph 3b. Activity Rates. UK
40,0045,0050,0055,0060,0065,0070,0075,0080,00
Nationals Migrants
Graph 3a. Activity Rates. Spain
40,00
45,00
50,00
55,00
60,00
65,00
70,00
75,00
80,00
Nationals Migrants
[ 7 ]
MIGRATION AND PRODUCTIVITY. BASIC FACTS
Graph 4a. Unemployment rates (%). Spain
0,00
5,00
10,00
15,00
20,00
25,00
30,00
Nationals Migrants
Graph 4b. Unemployment Rates (%). UK
0,00
5,00
10,00
15,00
20,00
25,00
30,00
Nationals Migrants
[ 8 ]
MIGRATION AND PRODUCTIVITY. BASIC FACTS
Graph 5b. Share of HIGH skill workers on total. UK
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Nationals Migrants
Graph 5a. Share of HIGH skill workers on total. SPAIN
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Nationals Migrants
[ 9 ]
MIGRATION AND PRODUCTIVITY
GDP PER CAPITA DECOMPOSITION:
ALTERNATIVE SCENARIOS
[ 10 ]
GDP PER CAPITA DECOMPOSITION
Equation (1)
Y = Real GDP
N = Total Population
WAP = Working Age Population
AP = Active Population
L = Employement
employment productivityGDPpc age activity
demography
Y WAP AP L Y
N N WAP AP L
[ 11 ]
GDP PER CAPITA DECOMPOSITIONGraph 6a. Contributions to GDP per capita
growth. ACTUAL SPAIN
-6,00%
-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment Productivity
Graph 6b. Contributions to GDP per capita growth ACTUAL UK
-6,00%
-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment Productivity
[ 12 ]
GDP PER CAPITA DECOMPOSITION
• SPAIN, THREE SCENARIOS ACCORDING TO DEMOGRAPHY
(INCLUDING LABOR MARKET) VARIABLES:
1. ACTUAL
2. VIRTUAL I: NO MIGRANTS (Substitute in (1) all the demography variables by the ones corresponding to Spanish nationals)
3. VIRTUAL II: UKneization (Substitute in (1) all the demography variables by the ones corresponding to UK aggregate (migrant+nationals) population)
[ 13 ]
SCENARIOS 1 & 2. ACTUAL AND VIRTUAL I (NOMIGRANTS)
Graph 7a. Contributions to GDP per capita growth. VIRTUAL SPAIN I. NO MIGRANTS
-6,00%
-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment
Graph 7b. ACTUAL-VIRTUAL I SPAIN
-0,40%
-0,20%
0,00%
0,20%
0,40%
0,60%
0,80%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment
[ 14 ]
SCENARIOS 1 & 3. ACTUAL AND VIRTUAL II (UKneization)
Graph 8a. Contributions to GDP per capita growth. VIRTUAL SPAIN II. UKneization
-1,00%
-0,50%
0,00%
0,50%
1,00%
1,50%
2,00%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment
Graph 8b. ACTUAL - VIRTUAL II SPAIN
-6,00%
-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Age Activity Rate Employment
[ 15 ]
GDP pc (demography induced) UNDER 3 SCENARIOS
Graph 9. GDP pc growth (demography induced) under 3 Scenarios. SPAIN
80
90
100
110
120
130
140
Actual Virtual I (No Migrants) Virtual II (Ukneization)
[ 16 ]
MIGRANTS AND PRODUCTIVITY
GROWTH ACCOUNTING
[ 17 ]
GROWTH ACCOUNTING
1
1
ln2
ln Quality effect2
______________
MIG MIG
TOT TOTt t MIG
TOT
NAT NAT
TOT TOTt t NAT
TOT
MIG MIG MIG
NAT NAT NAT
W W
W W HEMP
HEMP
W W
W W HEMP
HEMP
W w HEMP
W w HEMP
_____
TOT MIG NATW W W
ln ln Quantity effectTOT NATHEMP HEMP
[ 18 ]
GROWTH ACCOUNTING
Table 1a.'GROWTH ACCOUNTING. TOTAL ECONOMYSPAIN
1996-2000 2000-2004 1996-2004
GVA growth 4.286 2.888 3.587VAConH 2.498 1.547 2.023VAConKIT 0.554 0.286 0.420VAConKNIT 1.407 1.447 1.427VAConLC 0.304 0.382 0.343TFP Euklems -0.478 -0.774 -0.626
VAConHmigrants 0.278 1.056 0.667VAConLCmigrants -0.048 -0.177 -0.113NEW TFP -0.708 -1.653 -1.180Total Migrant Contribution to GVA growth 0.230 0.879 0.554
Labour productivity growth 0.370 0.433 0.401Migrants contribution (Quantity effect) -0.157 -0.623 -0.390Migrants contribution (Quality effect) -0.048 -0.177 -0.113Migrants total contribution to LP growth -0.205 -0.800 -0.503
[ 19 ]
GROWTH ACCOUNTING
Table 1b.'GROWTH ACCOUNTING. TOTAL ECONOMYUK
1987-1996 1996-2000 2000-2004 1996-2004
GVA growth 2.482 2.775 2.302 2.519VAConH 0.140 0.664 0.659 0.636VAConKIT 0.570 0.981 0.679 0.804VAConKNIT 0.708 0.800 0.582 0.696VAConLC 0.142 0.439 0.460 0.449TFP Euklems 0.922 -0.108 -0.078 -0.065
VAConHmigrants 0.013 0.157 0.289 0.222VAConLCmigrants 0.002 0.021 0.040 0.030NEW TFP 0.907 -0.286 -0.407 -0.318Total Migrant Contribution to GVA growth 0.015 0.178 0.329 0.252
Labour productivity growth 2.157 1.814 1.373 1.611Migrants contribution (Quantity effect) -0.005 -0.070 -0.118 -0.094Migrants contribution (Quality effect) 0.002 0.021 0.040 0.030Migrants total contribution to LP growth -0.004 -0.049 -0.078 -0.063
[ 20 ]
GROWTH ACCOUNTING:
SECTORAL DISAGGREGATION
[ 21 ]
Sectoral DisaggregationTable 2. Share of migrants in total employment by sectors. 2004 (%)
UK SPAIN
Total 9,84% 9,23%1 Agriculture 3,35% 13,54%2 Forestry 3,24% 13,48%B FISHING 3,75%10 Mining of coal and lignite; extraction of peat 3,44%11 Extraction of crude petroleum and natural gas and service 8,52% 13,21%12 Mining of uranium and thorium ores
13 Mining of metal ores 17,72%14 Other mining and quarrying 3,33% 8,50%15 Food products and beverages 11,69% 7,89%16 Tobacco products 9,43%17 Textiles 9,59% 7,93%18 Wearing Apparel, Dressing And Dying Of Fur 21,06% 8,53%19 Leather, leather products and footwear 11,83% 8,42%20 WOOD AND PRODUCTS OF WOOD AND CORK 2,86% 11,56%21 Pulp, paper and paper products 7,78% 6,73%22 Printing, publishing and reproduction 7,26%221 Publishing 10,68%22x Printing and reproduction 4,09%23 Coke, refined petroleum products and nuclear fuel 6,70% 2,08%24.Chemicals and chemical 0,00% 3,06%244 Pharmaceuticals 10,39%24x Chemicals excluding pharmaceuticals 9,00%25 Rubber and plastics products 5,57% 6,04%26 OTHER NON-METALLIC MINERAL PRODUCTS 6,11% 9,87%27 Basic metals 3,23% 2,59%28 Fabricated metal products 5,71% 8,41%29 MACHINERY, NEC 7,86% 3,05%30 Office, accounting and computing machinery 10,29% 2,02%31. Electrical machinery and apparatus, nec 3,46%313 Insulated wire 4,23%31x Other electrical machinery and apparatus nec 6,89%32 Radio, television and communication equipment 4,94%321 Electronic valves and tubes 12,85%322 Telecommunication equipment 10,47%323 Radio and television receivers 11,81%33 Medical, precision and optical instruments 1,62%331t3 Scientific instruments 4,58%334t5 Other instruments 7,80%34 Motor vehicles, trailers and semi-trailers 7,39% 2,75%35 Other transport equipment 6,19%351 Building and repairing of ships and boats 4,44%353 Aircraft and spacecraft 5,00%35x Railroad equipment and transport equipment nec 8,60%36 Manufacturing nec 6,52% 7,56%37 Recycling 1,68% 13,19%
[ 22 ]
Sectoral DisaggregationTable 2 (Cont.) Share of migrants in total employment by sectors. 2004 (%)
UK SPAIN
E ELECTRICITY, GAS AND WATER SUPPLY1,79%
40x Electricity supply 3,20%402 Gas supply 6,09%41 WATER SUPPLY 4,99% 0,37%F CONSTRUCTION 5,93% 15,89%50 Sale, maintenance and repair of motor vehicles and motorc 5,51% 4,44%51 Wholesale trade and commission trade, except of motor veh 9,81% 7,56%52 Retail trade, except of motor vehicles and motorcycles; r 8,40% 5,17%H HOTELS AND RESTAURANTS 18,32% 18,18%60 Inland transport 12,59% 4,85%61 Water transport 9,11% 1,35%62 Air transport 17,60% 7,91%63 Supporting and auxiliary transport activities; activities 10,43% 7,94%64 POST AND TELECOMMUNICATIONS 9,23% 7,20%65 Financial intermediation, except insurance and pension fu 12,08% 2,12%66 Insurance and pension funding, except compulsory social s 8,87% 0,93%67 Activities related to financial intermediation 8,27% 9,75%70x Other real estate activities 9,36% 9,13%71 Renting of machinery and equipment 6,30% 8,24%72 Computer and related activities 14,69% 6,78%73 Research and development 14,53% 5,00%74 Other business activities 8,08%741t4 Legal, technical and advertising 10,98%745t8 Other business activities, nec 14,86%L PUBLIC ADMIN AND DEFENCE; COMPULSORY SOCIAL SECURITY7,12% 0,46%M EDUCATION 9,08% 4,00%N HEALTH AND SOCIAL WORK 11,88% 3,44%90 Sewage and refuse disposal, sanitation and similar activi 3,52% 4,71%91 Activities of membership organizations nec 10,89% 6,01%92 Recreational, cultural and sporting activities 9,48%921t2 Media activities 13,01%923t7 Other recreational activites 8,27%93 Other service activities 8,01% 7,82%P PRIVATE HOUSEHOLDS WITH EMPLOYED PERSONS 18,35% 42,83%Q EXTRA-TERRITORIAL ORGANIZATIONS AND BODIES 69,15% 54,66%
Note: Marked with colors when shares are higher than 10%. Spain: yellow; UK: pink; both: green
[ 23 ]
GROWTH ACCOUNTING. SECTORAL DISAGGREGATIONTable 3. Growth Accounting by selected sectors. 1996-2004Contribution to Output growth
SPAIN UK
AgricultureOutput growth 0.116 0.248 'Migrants contribution (Quantity effect) 0.748 0.024 'Migrants contribution (Quality effect) -0.123 0.005Migrants total contribution to output growth 0.625 0.028
ManufacturingOutput growth 2.450 0.324 'Migrants contribution (Quantity effect) 0.470 0.158 'Migrants contribution (Quality effect) -0.080 0.022Migrants total contribution to output growth 0.391 0.180
ConstructionOutput growth 6.004 2.410 'Migrants contribution (Quantity effect) 1.490 0.190 'Migrants contribution (Quality effect) -0.237 0.026Migrants total contribution to output growth 1.253 0.215
TradeOutput growth 3.169 3.593 'Migrants contribution (Quantity effect) 0.404 0.191 'Migrants contribution (Quality effect) -0.069 0.025Migrants total contribution to output growth 0.335 0.216
Hotels and restaurantsOutput growth 3.032 3.442 'Migrants contribution (Quantity effect) 1.484 0.467 'Migrants contribution (Quality effect) -0.237 0.060Migrants total contribution to output growth 1.247 0.527
[ 24 ]
GROWTH ACCOUNTING. SECTORAL DISAGGREGATION
Table 3 (Cont.). Growth Accounting by selected sectors. 1996-2004Contribution to Output growth
SPAIN UK
Transport and storage and communicationOutput growth 4.938 5.930 'Migrants contribution (Quantity effect) 0.341 0.369 'Migrants contribution (Quality effect) -0.058 0.047Migrants total contribution to output growth 0.283 0.416
Finance, insurance, real estate and business servicesOutput growth 4.478 3.583 'Migrants contribution (Quantity effect) 0.340 0.269 'Migrants contribution (Quality effect) -0.058 0.038Migrants total contribution to output growth 0.282 0.306
Community, social and personal servicesOutput growth 3.395 1.708 'Migrants contribution (Quantity effect) 0.778 0.214 'Migrants contribution (Quality effect) -0.132 0.028Migrants total contribution to output growth 0.646 0.242
Private households with employed personsOutput growth 2.845 _ 'Migrants contribution (Quantity effect) 6.099 _ 'Migrants contribution (Quality effect) -0.826 _Migrants total contribution to output growth 5.273 _
[ 25 ]
GROWTH ACCOUNTING. SECTORAL DISAGGREGATION
Table 4. Growth Accounting by selected sectors. 1996-2004Contribution to Labour Productivity growth
SPAIN UK
AgricultureLabour productivity growth 0.677 3.806 'Migrants contribution (Quantity effect) -0.900 -0.012 'Migrants contribution (Quality effect) -0.123 0.005Migrants total contribution to LP growth -1.022 -0.007
ManufacturingLabour productivity growth 0.999 2.841 'Migrants contribution (Quantity effect) -0.254 -0.037 'Migrants contribution (Quality effect) -0.080 0.022Migrants total contribution to LP growth -0.334 -0.015
ConstructionLabour productivity growth -2.195 1.466 'Migrants contribution (Quantity effect) -0.529 0.007 'Migrants contribution (Quality effect) -0.237 0.026Migrants total contribution to LP growth -0.766 0.033
TradeLabour productivity growth -0.014 3.033 'Migrants contribution (Quantity effect) -0.195 -0.080 'Migrants contribution (Quality effect) -0.069 0.025Migrants total contribution to LP growth -0.264 -0.055
Hotels and restaurantsLabour productivity growth -1.635 1.148 'Migrants contribution (Quantity effect) -0.525 -0.136 'Migrants contribution (Quality effect) -0.237 0.060Migrants total contribution to LP growth -0.762 -0.076
[ 26 ]
GROWTH ACCOUNTING. SECTORAL DISAGGREGATION
Table 4 (Cont.). Growth Accounting by selected sectors. 1996-2004Contribution to Labour Productivity growth
SPAIN UK
Transport and storage and communicationLabour productivity growth 2.013 5.140 'Migrants contribution (Quantity effect) -0.331 -0.107 'Migrants contribution (Quality effect) -0.058 0.047Migrants total contribution to LP growth -0.389 -0.059
Finance, insurance, real estate and business servicesLabour productivity growth -0.019 0.518 'Migrants contribution (Quantity effect) -0.434 -0.263 'Migrants contribution (Quality effect) -0.058 0.038Migrants total contribution to LP growth -0.491 -0.226
Community, social and personal servicesLabour productivity growth 0.884 -0.140 'Migrants contribution (Quantity effect) -0.180 -0.028 'Migrants contribution (Quality effect) -0.132 0.028Migrants total contribution to LP growth -0.312 -0.001
Private households with employed personsLabour productivity growth -0.598 _ 'Migrants contribution (Quantity effect) 0.000 _ 'Migrants contribution (Quality effect) -0.826 _Migrants total contribution to LP growth -0.826 _
[ 27 ]
Preliminary econometric analysis
[ 28 ]
Preliminary econometric analysis
• Standard Cobb-Douglas production fct• First difference and fixed effects estimations with year dummies (no
levels available for all variables)• Different specifications for migrant/native labour input: 1) number of
hours (share*total hours), 2) quality adjusted by the overall labour quality 3) quality adjusted by separate indices for migrants and non-migrants (for UK only) 4) migrant share as a separate regressor in standard prod fct
• Data on migrant shares by industry and characteristics available for UK 1993 onwards and Spain 2000 onwards
• Estimations for all observations and three industry groups (1) non-services, (2) retail, transport and communication and (3) other services
• Separately: regressions of tfp growth on changes in migrant share and migrant labour input
[ 29 ]
Some results
• Migrant share alone generally not significant as an explanatory variable in production function but migrants as a separate input are usually significant
• Migrants may be a selected group but using a separate quality adjustment for them makes minimal difference for coefficient estimates: but panel is short and differences between industries don’t count
• Are migrants more productive than natives in the UK and less productive than natives in Spain?
• There are considerable differences between industries: how to control this without splitting the sample?
• Changes in migrant share do not explain contemporaneous tfp growth
[ 30 ]
Results
[ 31 ]
Extensions to the econometric work
• Using levels rather than indices to capture variation across industries
• Better control of heterogeneity across industries and dynamic error structures
• Experimenting with different ways of taking into account the characteristics of migrants/non-migrants: different skill indices, ethnic diversity, “old” vs. “new” migrants
• Testing for interaction effects: are migrants complements or substitutes for capital and skilled/unskilled native labour
• Studying endogeneity of migrant share: do industries with declining or improving productivity hire migrants, is production technology adopted related to migrant share?
[ 32 ]
Conclusions
• The characteristics of the migrant population, as well as its evolution over time and sectoral distribution are different between the two countries.
• GDP per capita growth has been driven by productivity growth in UK while for Spain the engine of growth has been demography.
• In both countries total migrant contribution to GDP growth has been positive, while the effect on labor productivity has been negative.
• In both countries, migrants quantity effect has been positive on output growth and negative on labor productivity.
• In Spain, migrants quality effect has been negative, both on output growth and on labor productivity, while for the UK it has been positive.
[ 33 ]
• Total migrants contribution to output growth is higher in Spain than in the UK with the exception of Transport & Storage & Communication and Finance & Insurance
• On the contrary, total migrant contribution to productivity growth is negative in almost all sectors and always higher in Spain than in the UK.
• Preliminary econometric results seem to support the suggestion that in the UK migrants are more productive than natives and in Spain vice versa. More work is needed to refine the econometric estimates.