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Transcript of National Institute of Economic and Social Research Economic impact of migration prepared on the...
National Instituteof Economic and Social Research
Economic impact of migration
prepared on the basis of „Labour mobility within the EU. The impact of enlargement and the functioning of the transitional arrangements” by T. Fic, D. Holland, P. Paluchowski, A. Rincon-Aznar, L. StokesJune 2011
Objective
• The objective of this study is to assess the macro-economic impact of the increased labour mobility that has resulted • from the two recent EU enlargements in 2004 and
2007 • on both host and home countries
Outline
• Labour mobility in the EU– Migration trends in Europe– Mobile workers’ characteristics
• Economic impact of labour mobility– The role of the enlargement process itself
• The impact of the crisis on migration
Total migration from EU8+2 to EU15
EU8+2 migration to EU15 in thousands
0
1000
2000
3000
4000
5000
600019
97
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
EU8 EU2
99% of labour movements in the EU have been East-West migration flows from EU8+2 to EU15Since the 2004 enlargement, about 1.8% of the EU8 population has moved to the EU15,
raising its population by 0.3% Since 2007, about 4.1% of the EU2 population has moved to the EU15,
raising the host country population by a further 0.3%
Migration to and from individual countries
• To individual EU15 countries
• Migration has raised the Irish population by about 4%, Spanish – by 1.9%; Italian – by 1.4% and the UK - by 1.1%; elsewhere - inflows have been small
• From individual EU8+2 countries
• The biggest outflows have materialised in the case of Romania – 7.2% of domestic population, Lithuania – 3.6% and Bulgaria – 3.4%
Migration to EU15 over 2004-2009
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
Spa
in
Italy
UK
Ger
man
y
Irel
and
Aus
tria
Gre
ece
Net
hs
Bel
gium
Fra
nce
Sw
eden
Den
mar
k
Por
tuga
l
Fin
land
EU8 EU2
Migration from EU8+2 over 2004-2009
-1800000
-1600000
-1400000
-1200000
-1000000
-800000
-600000
-400000
-200000
0
Rom
ania
Pol
and
Bul
garia
Lith
uani
a
Slo
vaki
a
Hun
gary
Latv
ia
Cze
ch R
ep
Est
onia
Slo
veni
a
Mobile workers’ characteristics
0
10
20
30
40
50
60
70
80
90
100
EU
8E
U2
*
EU
8E
U2
EU
8E
U2
EU
8*
EU
2
EU
8E
U2
EU
8E
U2
EU
8E
U2
EU
8E
U2
EU
8E
U2
EU
8E
U2
AT BE DE EL* ES FR IE IT NL UK
Low Medium High
• Age profile• More than 80% of migrants are of working
age, compared to an EU-27 average of about 65%
• There is an overrepresentation of working
age citizens from all EU8+2 countries
• Education profile• About 28% of all EU8+2 workers in EU15
countries are low-skilled, 55% are medium-skilled and 17% are high-skilled
• EU8 mobile workers are somewhat better educated than EU2 movers
• Germany, France and Ireland tend to attract high-skilled workers, while
• Greece, Belgium, Netherlands are more popular destinations among those with low skills
0%10%20%30%40%50%60%70%80%90%
100%
Bul
garia
Cze
chR
ep
Est
onia
Latv
ia
Lith
uani
a
Hun
gary
Pol
and
Rom
ania
Slo
veni
a
Slo
vaki
a
Age 15-64 Age 0 -14 Age 65+
Mobile workers’ characteristics
• Occupational structure• About 32% of EU8+2 nationals work in
elementary occupations
• About 54% are employed in occupations requiring medium skills such as craft and related trades workers, service workers and shop and market sales workers
• About 14% work in high skill occupations as legislators, senior officials, managers, professionals, technicians and associate professionals
• Sectoral structure• Arrivals from the EU8 work predominantly
in manufacturing and wholesale and retail trade, while
• movers from the EU2 are frequently employed in the construction sector and by private households
0
5
10
15
20
25
30
35
40
Eleme
ntary
occu
patio
ns
Serv
icewo
rker
s an
dsh
op an
dma
rket
sales
work
ers
Craft
and
relat
ed tr
ades
work
ers
Plant
and
mach
ineop
erato
rs an
das
semb
lers
Profe
ssion
als
Tech
nician
san
d ass
ociat
epr
ofess
ionals Cl
erks
Legis
lator
sse
nior
offici
als a
ndma
nage
rs
Skille
dag
ricult
ural
and f
isher
ywo
rker
s
EU8 EU2
0
5
10
15
20
25
Con
stru
ctio
n
Man
ufac
turin
g
Acco
mod
atio
n&fo
odse
rvic
e ac
tivitie
sW
hole
sale
and
reta
iltra
de; r
epai
r of m
otor
Activ
ities
ofho
useh
olds
as
Adm
inis
trativ
e&su
ppor
tse
rvic
e ac
tivitie
sH
ealth
&so
cial
wor
kac
tivitie
sTr
ansp
orta
tion
and
stor
age
Agric
ultu
re
Oth
er s
ervi
ce a
ctiv
ities
Prof
essi
onal
Educ
atio
n
Info
rmat
ion
and
com
unic
atio
n Arts
Publ
ic a
dmin
istra
tion
and
defe
nce*
Fina
ncia
l and
insu
ranc
e ac
tivitie
sW
ater
sup
ply;
sew
erag
e*
Rea
l est
ate
activ
ities*
EU8 EU2
What is the impact of migration on host and home economies?
• To assess the macroeconomic impact of labour flows from each of the EU8 and EU2 countries to each of the EU15 countries
• we conduct a series of macroeconomic simulations
• We use a global model NIGEM where most countries are modelled individually
• We use annual data on population stocks from Eurostat’s Population statistics for EU8+2 and EU15 countries over 2004-2009
What is the impact of migration on the long run level of output?• in receiving countries
• On average, population inflows from EU8 correspond to a long run increase in EU15 GDP by 0.34%, and in the case of EU2 – 0.31%.
• Ireland and the UK have benefited more than others from migration from the EU8, whereas Spain and Italy – from migration from the EU2
• in sending countries
• On average, population outflows from the EU8 correspond to a long run decline of EU8 GDP of 1.31%, and in the case of the EU2 – of 7.4% of EU2 GDP. Romania, Lithuania and Bulgaria have experienced biggest reductions
-0.5
0
0.5
1
1.5
2
2.5
3
Irel
and
Spa
in
Italy
UK
Aus
tria
Gre
ece
Den
mar
k
Bel
gium
Sw
eden
Net
hs
Por
tuga
l
Ger
man
y
Fin
land
Fra
nce
EU8 EU2 -9
-8
-7
-6
-5
-4
-3
-2
-1
0
Rom
ania
Lith
uani
a
Bul
garia
Latv
ia
Est
onia
Slo
vaki
a
Pol
and
Slo
veni
a
Hun
gary
Cze
ch R
ep
What is the role of the enlargement itself?
• Assuming that migration from the EU8 and EU2 would have continued at the same rate as before the accession, we decompose the long run GDP impact of migration into that driven by enlargement and other factors
• EU8 and 2004 enlargement EU2 and 2007 enlargement
Enlargement 2004
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Irel
and
UK
Den
mar
k
Sw
eden
Aus
tria
Bel
gium
Net
hs
Fin
land
Spa
in
Ger
man
y
Ital
y
Gre
ece
Por
tuga
l
Fra
nce
Other push and pull factors Enlargement
The process of migration from EU2 startedwell before the accessionEU2 average: about 50%
About 90% of the impact in the UK and Irelandresults from the enlargement itself.EU8 average: about 75%
Enlargement 2007
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Spa
in
Ital
y
Gre
ece
Aus
tria
Bel
gium
Irel
and
Por
tuga
l
UK
Den
mar
k
Fra
nce
Net
hs
Ger
man
y
Sw
eden
Fin
land
Other push and pull factors Enlargement
What has been the impact of the crisis on migration flows?
• If there was no crisis and emigration rates from individual EU8+2 in 2007 would have persisted in 2008 and 2009 , migration flows from EU8+2 would have been higher
• Taking into account relative positions of individual countries during the crisis (measured by unemployment rates and GDP pc) we estimate that:
• Spain, the UK and Ireland, as well as Italy became less attractive as destinations
• Germany and France, weathered the recession relatively well (especially as for the labour market performance) and have become more attractive as destinations
-200000
0
200000
400000
600000
800000
1000000
1200000
1400000
Cze
ch R
ep
Est
onia
Hun
gary
Lith
uani
a
Latv
ia
Pol
and
Slo
veni
a
Slo
vaki
a
EU
-8
Bul
garia
Rom
ania
EU
-2
Actual migration over 2008-2009 If there was no crisis
-0.05
-0.04
-0.03
-0.02
-0.01
0.00
0.01
0.02
0.03
0.04
Be
lgiu
m
De
nm
ark
Ge
rma
ny
Ire
lan
d
Gre
ece
Sp
ain
Fra
nce
Italy
Lu
x
Ne
ths
Au
stri
a
Po
rtu
ga
l
Fin
lan
d
Sw
ed
en
UK
cha
ng
e in
EU
8+
2 s
ha
re
GDP per capita Unemployment
What is the impact of the crisis on a sending country? Romanian perspective
• The main receiving countries of Romanian nationals are Italy and Spain, which attract about 88% of migrants
• Despite severe recessions in Spain and Italy, net migration rates from Romania remained positive
• However the distribution of Romanians across the EU15 has changed
– from Spain towards Italy (and the UK)
• The employment status of Romanian migrants worsened
– the share of unemployed increased in 2009 by about 4pp
– a vast majority work in construction, manufacturing and tourism – sectors which were hard hit by the crisis
• The crisis did not result in large flows of return migration
– self employed in Italy – access to benefits in Spain – circular migration
• Remittances – declined somewhat due to limited employment opportunities
– although continue to be almost as high as FDI inflows
Net migration rate
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Belg
ium
Denm
ark
Germ
any
Irela
nd
Gre
ece
Spain
Fra
nce
Italy
Luxem
bourg
Neth
erlands
Austr
ia
Port
ugal
Fin
land
Sw
eden
Unite
d
EU
-15
2007 2009
Remittances and FDI as % of GDP
0123456789
10
2005
2006
2007
2008
2009
Remittances FDI
What is the impact of the crisis on a receiving country? UK perspective
• Rates of total immigration from EU8 and EU2 remained positive
• The crisis resulted in outflows of Poles, Bulgarians and Lithuanians
• Over 2008-2009 the employment status of those who remained in the UK improved
– driven by increases in employment in services
– when the crisis hit some of those previously working in agriculture, manufacturing and construction, they either switched to services or decided to leave
• Return migration – Estimated at about 50000 EU8+2 nationals
(2009) – resulted both from poorer labour market
situation and depreciation of the GBP
• The value of remittances sent from the UK declined
– Driven by return migration and weak pound
• As the UK economy recovers, immigration rates may increase, however, some of potential flows from the EU8 may be diverted from the UK towards Germany
– traditional destination for Poles
– lifted barriers on access to its labour market on 1 May 2011
– currently somewhat better labour market prospects
Immigration rate
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
Bul
garia
Cze
chia
Est
onia
Hun
gary
Latv
ia
Lith
uani
a
Pol
and
Rom
ania
Slo
vaki
a
Slo
veni
a
EU
8
EU
-2
2007 2009
Conclusions
• Since 2004 about 1.8% of the EU8 population has moved to the EU15:– raising the EU15 population by 0.3%
– of this, approximately 75% can be attributed to the enlargement process itself
• Since 2007, about 4.1% of the EU2 population has moved to the EU15:– raising the EU15 population by a further 0.3%.
– of this, just over 50% can be attributed to the enlargement process itself
Conclusions
• Migration raised the long run level of output in receiving countries while it left a long term scar on output in sending countries:– in Bulgaria, Romania and Lithuania the potential level of
output may be permanently reduced by 5-10%, in Latvia and Estonia - by at least 3%
– in receiving countries the macro-economic impact is small, possibly raising the long-run level of potential output by about ½%, with the exception of Ireland - 2½%, and the UK – about 1%
Policy implications• Lifting barriers in Germany may divert some EU8+2 workers
away from the UK and towards Germany, especially given the relative strength of the German economy compared to the UK
• By 31 December 2011, the UK will have to decide whether to extend current restrictions on labour market access to citizens from Bulgaria and Romania. If so, the government will need to demonstrate that lifting barriers threatens a “serious disturbance of its labour market”. Recent NIESR research would provide little support for such an argument