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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. Stokes
June 2011
National Institute
of Economic and
Social Research
Objective
• The objective of this study is to assess the macroeconomic 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
6000
5000
4000
3000
2000
1000
EU8
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
EU2
99% of labour movements in the EU have been East-West migration flows from EU8+2 to EU15
Since 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
• From individual EU8+2
countries
Migration to EU15 over 2004-2009
EU8
•
Finland
Portugal
Denmark
-1200000
Sweden
-1000000
0
France
100000
Belgium
-800000
Neths
200000
Greece
-600000
Austria
300000
Ireland
-400000
Germany
-200000
400000
UK
500000
Italy
0
Spain
600000
Slovenia
Estonia
Czech Rep
Latvia
Hungary
-1400000
-1600000
-1800000
EU2
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
Slovakia
700000
Lithuania
800000
Bulgaria
Romania
900000
Poland
Migration from EU8+2 over 2004-2009
•
The biggest outflows have materialised in
the case of Romania – 7.2% of domestic
population, Lithuania – 3.6% and Bulgaria
– 3.4%
Mobile workers’ characteristics
Slovenia
Slovakia
EU8
EU2
EU8
EU2
EU8
EU2
EU8
EU2
IT
NL
Poland
Lithuania
Romania
EU8
EU2
IE
Hungary
EU8
EU2
FR
80
70
60
50
40
30
20
10
0
EU8
EU2
•
Age 65+
90
EU8
EU2
•
Age 0 -14
100
EU8
EU2*
•
About 28% of all EU8+2 workers in EU15
countries are low-skilled, 55% are mediumskilled 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
ES
Age 15-64
• Education profile
•
Latvia
Bulgaria
age citizens from all EU8+2 countries
AT
BE
DE
EU8*
EU2
•
More than 80% of migrants are of working
age, compared to an EU-27 average of
about 65%
There is an overrepresentation of working
Estonia
•
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Czech
Rep
• Age profile
EL*
Low
Medium
High
UK
•
•
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
EU8
EU2
0
Real estate activities*
Public administration
and defence*
Financial and
insurance activities
Water supply;
sewerage*
Arts
Information and
comunication
Education
Professional
Other service activities
• Sectoral structure
Skilled
agricultural
and fishery
workers
Legislators
senior
officials and
managers
Clerks
Technicians
and associate
professionals
Professionals
Plant and
machine
operators and
assemblers
Craft and
related trades
workers
Service
workers and
shop and
market sales
workers
5
0
Agriculture
•
Manufacturing
•
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
Accomodation&food
service activities
Wholesale and retail
trade; repair of motor
Activities of
households as
Administrative&support
service activities
Health &social work
activities
Transportation and
storage
•
Elementary
occupations
• Occupational structure
Construction
Mobile workers’ characteristics
40
35
30
25
20
15
10
EU8 EU2
25
20
15
10
5
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 20042009
What is the impact of migration on the long
run level of output?
Czech Rep
Hungary
Slovenia
Poland
Slovakia
Estonia
Latvia
2.5
Bulgaria
3
Lithuania
• in sending countries
Romania
• in receiving countries
0
2
-1
-2
1.5
-3
1
-4
0.5
-5
EU8
•
•
France
Finland
Germany
Portugal
Neths
Sweden
Belgium
Greece
Austria
UK
Italy
Spain
Ireland
-0.5
Denmark
-6
0
-7
-8
-9
EU2
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
•
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
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 2007
Enlargement 2004
1.4
3.0
1.2
2.5
1.0
2.0
0.8
1.5
0.6
1.0
0.4
0.5
0.2
Other push and pull factors
Enlargement
About 90% of the impact in the UK and Ireland
results from the enlargement itself.
EU8 average: about 75%
Other push and pull factors
Finland
Sweden
Germany
Neths
France
Denmark
UK
Portugal
Ireland
Belgium
Austria
Greece
-0.2
Italy
0.0
Spain
France
Portugal
Greece
Italy
Germany
Spain
Finland
Neths
Belgium
Austria
Sweden
Denmark
UK
Ireland
0.0
Enlargement
The process of migration from EU2 started
well before the accession
EU2 average: about 50%
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
1400000
1200000
1000000
800000
600000
400000
200000
Actual migration over 2008-2009
EU-2
Romania
Bulgaria
EU-8
Slovakia
Slovenia
Poland
Latvia
Lithuania
Hungary
Estonia
Czech Rep
-200000
If there was no crisis
0.04
0.03
0.02
0.01
0.00
-0.01
-0.02
-0.03
-0.04
GDP per capita
Unemployment
UK
Sweden
Finland
Portugal
Austria
Neths
Lux
Italy
France
Spain
Greece
Ireland
Germany
-0.05
Denmark
•
0
Belgium
•
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
change in EU8+2 share
•
What is the impact of the crisis on a sending
country? Romanian perspective
1.0
–
–
–
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
Remittances and FDI as % of GDP
10
9
8
7
6
5
4
3
2
1
0
Remittances
FDI
EU-15
United
Sweden
Finland
Austria
Portugal
Netherlands
Italy
France
Luxembourg
2009
2009
The crisis did not result in large flows of
return migration
2007
2008
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
Spain
-0.5
Greece
0.0
Ireland
0.5
2007
–
•
1.5
The employment status of Romanian
migrants worsened
–
•
2.0
2006
•
from Spain towards Italy (and the UK)
2.5
Germany
–
3.0
Denmark
•
Net migration rate
Belgium
•
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
2005
•
What is the impact of the crisis on a receiving
country? UK perspective
•
•
Immigration rate
Rates of total immigration from EU8
and EU2 remained positive
The crisis resulted in outflows of
Poles, Bulgarians and Lithuanians
0.5
0.4
0.3
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
2007
•
EU-2
EU8
Slovenia
Slovakia
Romania
Poland
Lithuania
Latvia
-0.1
Hungary
0.0
Estonia
–
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
0.1
Czechia
–
•
0.2
Over 2008-2009 the employment
status of those who remained in the
UK improved
Bulgaria
•
2009
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
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