1 / 23

Enlargement, Migration and Policy Co-ordination

Enlargement, Migration and Policy Co-ordination. Tito Boeri (Bocconi University and Fondazione RODOLFO DEBENEDETTI). Labour and Capital Flows in Europe Following Enlargement IMF-JVI-NBP Conference 30-31 January 2006, Warsaw. Outline.

tracey
Download Presentation

Enlargement, Migration and Policy Co-ordination

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Enlargement, Migration and Policy Co-ordination Tito Boeri (Bocconi University and Fondazione RODOLFO DEBENEDETTI) Labour and Capital Flows in Europe Following Enlargement IMF-JVI-NBP Conference 30-31 January 2006, Warsaw

  2. Outline • Why a race-to-the top in migration restrictions before May 1st 2004? A policy co-ordination dilemma? • Why are Europeans getting so tough on migrants? • Which migration policy for the European Union?

  3. Key findings/messages • Migration flows from NMS are being diverted by asymmetric transitional arrangements in the EU 15, reducing aggregate benefits from Enlargement • Migration to “imperfect” labour markets is more costly for natives than migration to flexible markets in the short-run • A point system may ease co-ordination of migration policies at the EU level.

  4. The “race to the top” From free mobility to transitional arrangements restricting access to: • labour market inAustria,Belgium, Denmark, Finland, France, Germany, Italy, Greece, Luxembourg, the Netherlands, Portugal and Spain • welfare in Ireland and UK • Only in Sweden free mobility

  5. Effects of the race-to-the-top • UK.counterfactual: 12,000 (net inflow); recorded flows: May through Dec 04: 130,000 migrants from NMS. Excluding those applying before May and temporary migrants, still more than 50,000. • Ireland.counterfactual: 3,100 (net inflow); recorded flows: 31,000 permits for workers from NMS in the May-October 04 period. • Sweden. counterfactual: 6,200 (net inflow); recorded flows 3,966 work permits (up from 2,097 in 2003) • Denmark. counterfactual: 2,900 (net inflow); recorded flows: 2,048 work permits in 2004 • Italy. counterfactual: 30,000 (net inflow); recorded flows : 15,000 in 2004-5

  6. Less migration and diverted Altogether, preliminary evidence suggests that(i) total migration into the EU-15 is at around 100-150,000 persons in 2004, roughly one-third of the projected migration potential, and (ii) substantial migration diversion away from main receiving countries towards those which have been less restrictive (and English-speaking)

  7. Why racing to the top? • Short-term aggregate costs of migration to “rigid countries” • Highlighted by calibrating to Eastern Enlargement a model of migration between economies with European institutions: • Collective bargaining and minimum wages • Barriers to regional mobility • Welfare (unemployment) benefits

  8. With rigid LS With elastic LS Immigration to flexible labour markets w w Ls Ls w0 w0 w1 w1 Ld Ld N N+M L L N’ N N’+M

  9. Immigration to imperfect labour markets • With a minimum wage • With semi-rigid wages w w Ls Ls w0 w w1 Ld Ld L L N N Unemp Unemp

  10. Flexible vs. Rigid Labour Markets

  11. Migration is however a substitute for low regional mobility

  12. Regional diff Homogeneous regions change in % at migration of 1 % 1. GDP • total region: 0.51 0.26 • West: 0.90 0.57 • East: - 0.55 - 0.55 2. Native income • total region: 0.04 - 0.04 • West: 0.003 - 0.12 • East: 0.16 0.16 3. Migrant income 242.5 167.6 Accounting for “greasing the wheels” effects

  13. Centralised bargaining: lower unemploymentalso in theSouth

  14. With Unemployment Benefits

  15. Summary of simulation results • Large total gains from migration: +0.2 to +0.5% GDP with migration of 1% • Most gains accrue however to migrants and their employers • Losses for manual labour (-0.2% to -0.55%) and non-manual labour (-0.1% to -0.5%) in receiving countries • Stronger conflict of interest migrants-natives in presence of generous welfare systems and unskilled migration

  16. The co-ordination dilemma • Public opinion is more against migrants in countries with “rigidities” and generous welfare • Institutional asymmetries make it more difficult to co-ordinate inducing tighter and tighter migration policies in rigid countries

  17. Looking ahead: policies vis-à-vis third countries Two options: • Closing the welfare door to migrants? 2. Increasing the skill content of migration via a point system

  18. Closing the welfare door? • Popular policy. It would address concerns of public opinion. • It would affect the size of migration flows (increase by 1 stdev of generosity implies 3% higher migration) more than their skill composition • Difficult to enforce: experience of California • Problems in the assimilation of migrants • Equity considerations

  19. A point system? • Skilled migration is better for rigid countries • Simplification of policies (including asylum) • Is it effective in selecting migrants? • Risk of “brain drain”? • Equity considerations.

  20. Evidence on brain drain effects on LDC growth Source: Docquier – Rappoport (2004)

  21. Skill distribution of migrants ad natives (IALS scores) Germany New Zealand

  22. Migration policies are already getting selective • Everywhere tightening of migration policies towards the unskilled • While race to attract highly skilled migrants • Explicit point systems in an increasing number of countries (Canada since 67, Australia since 84, New Zealand since 91, Switzerland since 96)

  23. Can it be a EU policy?

More Related