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Inhaltsbereich: Institut für Arbeitsmarkt- und Berufsforschung

Labor mobility in the enlarged EU

Abstract

The EU's Eastern enlargement has triggered a substantial labor migration from the new into the old member states of the EU. In this chapter, we analyze the Impact of this change in labor supply on macroeconomic aggregates and the distribution of earnings and employment opportunities. For this purpose, we employ two general equilibrium models which analyze the migration Impact in a setting with imperfect labor markets. The first model is based on a nested production function, which enables us to examine the migration effects on wages and unemployment in the different cells of the labor market. The second model is based on CGE framework, which allows considering the restructuring of sectors and the interaction of migration with trade and capital movements. Both models assume that capital stocks adjust to labor supply shocks. Based on scenarios of labor migration from the EU8 into the EU15 from 2004 to 2007, we find substantial gains of migration for the enlarged EU: the aggregate GDP of the integrated area increases by about 0.2%, which corresponds to a sum of 24 Billion euros. The total factor income of the native population increases slightly in the receiving countries. The labor market effects are surprisingly small: in the short-run, wages decline by about to 0.1% in the EU15, and the unemployment rate increases by about 0.1 percentage points. Conversely, wages may increase by 0.3% in the new member states, and the unemployment rate may decline by 0.4 percentage points. In the long-run, after the adjustment of capital stocks, migration is by and lange neutral for wages and unemployment. Since the skill structure of the migrant workforce does not differ largely from the native workforce in the sending and the receiving countries, we observe only moderate distributional effects across the different groups in the labor markets. Less-skilled workers in the receiving countries lose more proportionally, while high-skilled workers tend to benefit. The converse holds for the sending countries.

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Bibliographical information

Baas, Timo; Brücker, Herbert; Hauptmann, Andreas (2010): Labor mobility in the enlarged EU * who wins, who loses? In: M. Kahanec & K. F. Zimmermann (Eds.), EU labor markets after post-enlargement migration, Berlin: Springer, pp. 47-70.
 

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