Labor Market Determinants

Labor Market Determinants of Migration Flows in Europe

ABSTRACT. Considerable research attention has focused on the labor market effects of immigration, the performance and competitiveness of the European labor market, and the costs and benefits of labor mobility for sending and receiving countries. The aim of the present study is to examine and evaluate the negative social ef¬fects resulting from the circulation of workers, the social and economic determinants of migration, and the impact of immigration on natives’ labor market outcomes such as wages and employment.

Keywords: labor market; migration flow; Europe; employment; sending and receiving countries

1. Introduction

In this paper I am particularly interested in exploring the impact

The combined effect of sput¬tering economies and continuing fiscal woes suggest that unemployment and social unrest are likely to last. Demographic shortfalls caused by persistently low fertility rates have encour¬aged many European countries [13] to focus on mi¬gration policy and future migration trends. Governments must build legal frameworks for the entry, employ¬ment, and integration of migrants. Europe should invest intelligently in building up the region’s human capital stocks, should open its markets and create a safe and secure envi¬ronment for investment in the The Middle East and North Africa (MENA) region under preferential tariff rules, and should create incentives for firms [11] to relocate some of their production facilities to the region. European governments must prepare for more managed migration to overcome demo¬graphic deficits and become more competitive in attracting the better skilled workers robust economies require. The essence of success on migra¬tion is managing an orderly and flexibly regulated flow of legal immigrants. Europe’s high-income countries are facing demo¬graphic decline and will increasingly compete for skilled migrants. [14] Firms determine their labor demand [24] when wages are fixed. The wage responsiveness to labor supply shocks declines with the skill level of workers in countries with very progressive tax systems. The slope of the

Cross-country differences in migration regimes may contribute to explain differences in immigrant labor market outcomes across EU countries. Non-EU immigrants have significantly worse economic outcomes than the majority population in most EU countries. Migration policies are the set of rules governing the admission to the country and access to the labor market of non-national workers, influencing the size and attributes of the migrant workforce relative to the jobs in demand in the economy, and affecting the migrant experience in the host labor market by regulating access to the labor market of the different categories of non-national workers. Migration policy-making in Europe remains largely dominated by national policy frameworks (EU countries have been reluctant in giving up their national sovereignty in the governance of labor migration and national policy approaches). [46] Immigration is driven by strong social and economic forces [23] that are bound to compete with state regulation. Formal labor market laws can operate on migration decisions only through social and economic mediators. Admissions and residence laws often obscure the influence of immigrants’ rights laws on migration flows. The citizens of each member state have the right to move and reside throughout the EU with few restrictions. A larger stock of co-national migrants in a given destination state