Labour migration as a way to escape from employment vulnerability? Evidence from the European Union

Free Movement of people is a fundamental principle of the European Union (EU). In a context of strong divergence in employment and working conditions among EU member states, migration can be seen as a way to increase employment opportunities but also to escape from poor working conditions at home. In this article, we focus on the possible influence of employment vulnerability by comparing its individual level among migrants and native workers in EU countries. We implement propensity score matching methods using data from the European Social Survey (2008) and indexes of employment vulnerability proposed by Bazillier et al. (2014). Overall, we show that migrants face the same level of employment vulnerability than natives, all other things being equal. But there are strong differences by skill-level. Low-skilled migrants have a lower level of vulnerability mainly because of a lower level of employer vulnerability while high-skilled migrants face a higher level of vulnerability, because of a higher level of job vulnerability.     

EU Enlargement and the Future of the Welfare State

The eastern enlargement of the EU resembles German unification in its momentousness. Whereas the latter led to a 26% increase in the population of the Federal Republic, the former will increase the population of the EU by 28% if all ten entry aspirants are accepted. A special problem will be posed by migration. Given the existing wage differences between eastern and western European countries, a massive westward migration can be expected after enlargement. A temporary east–to–west migration until the eastern countries create an efficient capital stock makes economic sense if this is driven by wage differences and meets with a flexible labour market. Migration does not make economic sense, however, if, and to the extent that, it is induced by the current social assistance systems. Moreover, welfare–motivated migration would create competition among western European states to frighten off potential migrants, and this would lead to an erosion of the traditional social welfare state. If the EU plan incorporated limitation on the free movement of labour, beneficial migration would also cease. A better solution would be to limit access to the western social systems, at least for a transitional period, in order to filter out migration induced by differing social standards. An EU–wide application of the home–country principle in the granting of social benefits would achieve this goal.     

The European refugee crisis and the natural rate of output

The European Commission follows a harmonized approach for calculating structural (potential) output for EU member states that takes into account labour as an important ingredient. This article shows how the recent huge migrants’ inflow to Europe affects trend output. Due to the fact that the immigrants immediately increase the working population but effectively do not enter the labour market, we illustrate that the potential output is potentially upward biased without any corrections. Taking Germany as an example, we find that the average medium-term potential growth rate is lower if the migration flow is modelled adequately compared to results based on the unadjusted European Commission procedure.     

The macroeconomic consequences of migration diversion: Evidence for Germany and the UK

This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU's Eastern Enlargement. The EU has agreed transitional periods for the free movement of workers with the new member states from Central and Eastern Europe. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU. Based on a forecast of the migration potential under the conditions of free movement and of the transitional arrangements, we employ a CGE model with imperfect labour markets to analyse the macroeconomic effects of this diversion process. We find that EU Eastern enlargement has increased in the GDP per capita in the UK substantially, but that the diversion of migration flows towards the UK has reduced wage gains and the decline in unemployment there. The effects of the EU Eastern enlargement are less favourable for Germany, but the diversion of migration flows has protected workers there against a detrimental impact on wages and unemployment.     

EU Enlargement, Migration and the New Constitution

The paper deals with the effects of migration resulting fromEU Eastern enlargement on the welfare states of Western Europe.Although migration is good in principle, as it yields gainsfrom trade and specialization for all countries involved, itdoes so only if it meets with flexible labour markets and ifit is not artificially induced by gifts of the welfare state.This is not the present state of affairs in Western Europe.In addition to measures that make labour markets more flexible,the introduction of delayed integration of working migrantsand the home country principle for nonworking migrants is arational reaction of the state. The proposed new EU constitution,which contains far-reaching rules for a European social union,should be amended accordingly. (JEL E2, F2, H0, J3, J6)     

Labour migration in the enlarged EU: a new economic geography approach

This paper studies the impact of migration policy liberalisation on international labour migration in the enlarged European Union (EU) in a structural economic geography approach. The liberalisation of migration policy would induce an additional 1.80–2.98% of the total EU workforce to change their country of location, with most of migrant workers relocating from the East to the West. The average net migration rate is decreasing in the level of integration, suggesting that from an economic point of view no regulatory policy responses are necessary to labour migration in the enlarged EU.     

The Global Economic Crisis and Migrant Workers: The Case of the Construction Sector in Europe

This paper examines the employment response of native and migrant workers over the business cycle in the construction sectors of European countries between 2008 and 2011. Using a dynamic model (Generalized Method of Moments), which accounts for ‘intergroup substitutability’, we observe that differences in the cyclical employment patterns of migrants and natives in the construction sector may be due to a potential selection of EU and non-EU migrants who are disproportionately prone to cyclical fluctuations in temporary jobs or a higher turnover rate.     

The Impact of Exchange Rate Volatility on UK Exports to EU Countries

This paper investigates the impact of exchange rate volatility on UK exports to European Union (EU) countries by means of a newly developed ARDL bounds testing procedure to cointegration. Using monthly data disaggregated by market of destination and sectors for the period 1993ml to 2001m6, our results indicate that UK exports to the EU14, at both aggregate and sectoral level, are generally income elastic, relative price inelastic and largely unaffected by short‐term exchange rate volatility. Re‐estimation of the model using a long‐term measure of volatility, however, provides evidence supporting the hypothesis that exchange rate uncertainty has a negative and significant influence on UK exports to EU countries.     

Do ethnic networks influence circular migration? Evidence from the UK

This article identifies ethnic network effects among temporary migrants in the UK. Using microdata from Understanding Society and the UK Census, the empirical results show that ethnic networks change the individual probability for circular migration. These effects are strong and significant only for some ethnicities, when controlling for a set of socio-economic characteristics and when adding spatial variability     

Asymmetric J-curve: evidence from UK-German commodity trade

Empirica - Previous studies that have investigated the J-curve phenomenon between the UK and its largest trading partner from the European Union (EU), Germany, used aggregate bilateral trade data...     

The political economy of post-crisis international standards for resolving financial institutions

The development of post-crisis international standards for resolving financial institutions highlights an intriguing puzzle: the European Union (EU), which is often considered as a ‘great financial power’, had a marginal influence in the standard-setting process, which was led by the United States (US) and the United Kingdom (UK). Why? This paper brings together and further develops the concepts of cross-border externalities derived from the hierarchical network structure of the international financial system and domestic regulatory capacity. The US and the UK had the incentives (externalities) to promote and the domestic capacity to shape international standards. By contrast, the EU was mainly exposed to regional (intra-EU) cross-border externalities and lacked regulatory capacity on the matter. Paradoxically, international standards contributed to developing EU resolution capacity by facilitating an agreement on EU (and later on, euro area) rules.     

The Motives for Joint Ventures: A Transaction Costs Analysis of Japanese MNES in the UK

What factors determine the choice of Japanese companies between part and full ownership of their UK subsidiaries? In seeking to answer this question, this study employs data of Japanese foreign direct investment (FDI), through joint ventures, in the UK, not previously used. The main findings of the econometric work presented is that transaction costs are the principal consideration when Japanese firms choose between part and full ownership of their UK subsidiaries{softhyphen}. Variables that have featured prominently in studies relating to either US parents or for subsidiaries in the US do not appear to play a significant role. The European Union (EU) market appears to be the target of Japanese foreign direct investment in the UK.     

The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom,Korea, Japan,China, and the European Union

We explored a comparative static computable general equilibrium model with six regions and 12 sectors to estimate the impacts of the recent UK–Korea free trade agreement (FTA) along with the European Union (EU)–Korea FTA. The empirical results provide quantitative evidence of the impact on national GDP, national exports and imports by sector, and the changes in exports or imports among the United Kingdom, Korea, Japan, China, and the EU. The UK–Korea FTA, along with the EU–Korea FTA, increases GDP and welfare for the United Kingdom and Korea; moreover, there is a large increase in automobiles, transport equipment, and machinery exports between Korea and the United Kingdom. The GDP and welfare level of non-member countries such as Japan and China will slightly decline. Exports from the United Kingdom and Korea to non-member countries are also expected to decrease in most manufacturing sectors. The UK–Korea FTA will lead to increases in imports between the United Kingdom and Korea due to mutual trade creation effects and trade diversion effects. However, non-member countries such as Japan's exports are expected to experience a large decline in automobiles to the United Kingdom and in most manufacturing products to Korea due to the negative impact of the UK–Korea FTA.     

How do Migrants Choose Their Destination Country? An Analysis of Institutional Determinants

We analyze the effects of socio‐economic and institutional determinants, especially labor‐market institutions and features of social protection systems, on migrants’ location choices. Based on micro‐data for France, Germany, the UK, and the USA, we study migration to one of these four countries using a multinomial choice framework. Our estimates confirm conventional results regarding wages, networks, and unemployment rates. In addition, we find that there are indications of “insider–outsider effects” for union coverage and unemployment benefits, while employment protection does not have a clear‐cut impact on migration. Good education and health systems tend to attract migrants, while generous pension systems deter them.     

The Political Economy of Brexit and the Future of British Capitalism First Symposium

The political economy of Brexit generates new challenges for the UK’s national business model and for European capitalism more broadly. Two symposia examine the implications of the UK’s withdrawal from the EU in key economic policy areas. These symposia contribute to two main bodies of academic literature: the political economy literature on varieties of capitalism, with a specific focus on the UK, and the political economy literature on key economic policy areas of the EU. This short introduction to the first symposium first outlines the key features of the British variety of capitalism and highlight the main questions raised by Brexit in that respect. It then summarises the main findings of the papers of the first symposium and tease out some common themes.     

Foreign Human Capital and Total Factor Productivity: A Sectoral Approach

We analyze the role of migrants in productivity growth in the three largest European countries—France, Germany and the United Kingdom—in the years 1994–2007, using Total Factor Productivity. Unlike previous research, which mainly employs a regional approach, our analysis is at the sectoral level: this allows to distinguish the real contribution of migrants to productivity from possible inter-sectoral complementarities, which might also foster growth. We control for the share of migrants and the different components of human-capital, such as education, age and diversity, and adopt instrumental variables strategies to address the possible endogeneity of migration. The results show that migrants contribute to the productivity of the sectors in which they are employed, but with important differences: highly-educated migrants show a larger positive effect in high-tech sectors, and to a lesser extent in services sector. The diversity of countries of origin contributes to productivity growth only in the services sectors.     

The Political Economy of Mobility Partnerships – Structural Power in the EU's External Migration Policy

The research on European Union (EU) external relations and the EU's own official discourse frequently portray the EU as a soft power that provides its neighbourhood with good governance principles. The European Mobility Partnerships (EU MPs) can be considered the most recent manifestation of this rhetoric. Studies on EU MPs reflect a narrow understanding of power. This paper aims to contribute to a more comprehensive understanding of the power dimension inherent in the EU's external relations. It develops a neogramscian theoretical framework to challenge the rhetoric of the EU as a soft power and normative hegemon. Drawing on semi-structured expert interviews and textual analysis of documents, it seeks to reveal whether and in what ways socio-economic power dynamics shape the EU MPs. This article argues that while, at the beginning, the design of the EU MPs as a policy tool has been very much influenced by neoliberal ideas such as the market-oriented liberalisation of mobility and the flexibilisation of labour, implementation is marked by the neo-mercantilist approach of restricting immigration and maximising the efficiency of readmission. Applying a critical political economy concept of power is helpful in understanding how market forces influence EU external migration policy, transcending a narrow understanding of power.     

The effect of rural labor migration on poverty alleviation: a village-level study in China

The construction of the new socialist countryside is being carried out in China nowadays. Although lots of successful experience has been gotten, different problems occur in various regions yet. To analyze the relationships among rural labor migration, poverty alleviation and characteristics of migrants is important in considering the effect of rural labor migration on the construction of the new socialist countryside. Available sampling and typical case study are adopted and 236 questionnaires are collected from[bur villages in northwest GuangxL China, Daxin Lixin, Longhe and Yongchang. We analyze the rural labor migration status, characteristics of migrants, remittance situation and income, household income and the ratio of remittance income to total household income. A bout 2/3 of the households have migrants in surveyed villages. And nearly half of the migration households have only one fam- ily member as migrants in the four villages. The migrants mainly comprise male and the younger, with the education level of junior middte school and higher More than half of the migrants are employed in Guangdong Province. But the characteristics of migrants in Yongchang are more diverse. The rural labor migration in the village is extremely active and extensive. And over 60% of the household with family members as migrants have remittance income. The rate in Yongchang is extremely high (80%). And the income of households with migrants getting remittance income significantly higher than their counterparts. More than half of their income comes from remittance as far as the former kind of household is concerned And in Yongchang, the rate is nearly 80%. The conclusion is that rural labor migration is popular and extensive in lots of villages. And the migration and remittance play an important role in rural household income, especially in some poor villages. For this kind of village, the rural labor migration may be some "compulsory course" in rural development. And the rural labor emigration is an essential way in poverty al-leviation. This is the first step in the construction of the new socialist countryside.     

Monetary policy games and international migration of labor in interdependent economies

"In this paper we incorporate the possibility of international migration into a monetary policy game played by governments in unionized interdependent economies. We show that contrary to usual presumptions, established by earlier studies that ignore the possibility of international migration, inter-government cooperation in the monetary field may well turn out to be advantageous. This has important implications for the European economies, since it suggests that measures taken towards encouraging international migration within EU [the European Union] will not only harmonize the European labor markets but will also make monetary policy cooperation within Europe, as required by the Maastrict Treaty, more advantageous."     

Stock Market Integration between Three CEECs,Russia, and the UK

This paper estimates a trivariate VAR‐GARCH(1,1)‐in‐mean model to examine linkages between the stock markets of three Central and Eastern European countries (CEECs), specifically the Czech Republic, Hungary, and Poland, and both the UK and Russia. The adopted framework allows to analyze interdependence by estimating volatility spillovers, and also contagion by testing for possible shifts in the transmission of volatility following the introduction of the euro and EU accession. Further evidence on possible changes in the transmission mechanism (namely, on whether there is contagion) can be obtained by examining the conditional correlations implied by the estimated model over different time periods. The empirical findings suggest that there is significant co‐movement (interdependence) of these CEEC markets with both the Russian and the UK ones. Furthermore, whilst the introduction of the euro has had mixed effects, EU accession has resulted in an increase in volatility spillovers between the three CEECs considered and the UK (contagion).