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Institutions and the Location Decisions of Highly Skilled Migrants to Europe. WWWforEurope Working Paper No. 78

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  • Klaus Nowotny

Abstract

This paper investigates the economic, labour market and institutional factors that make regions and countries attractive for highly skilled migrants vis-à-vis low-skill migrants. Based on micro-data for 11 EU countries, a discrete choice model estimated at the NUTS-2 level shows that location decisions are not only determined by factors related to earnings opportunities, distance, networks, common language and colonial relationships, but also by institutional factors such as migration policy, the income tax system, or labour market institutions. It also lends some support to the welfare magnet hypothesis: a higher unemployment replacement rate increases the attractiveness of a country. The empirical analysis however reveals only minor differences in the effects of institutions on location decisions by skill level, limiting the scope for policy makers to affect the skill composition of migration.

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  • Klaus Nowotny, 2015. "Institutions and the Location Decisions of Highly Skilled Migrants to Europe. WWWforEurope Working Paper No. 78," WIFO Studies, WIFO, number 57885, April.
    • Handle: RePEc:wfo:wstudy:57885
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    1. Jesús Crespo Cuaresma & Peter Huber & Anna Raggl, 2015. "Reaping the Benefits of Migration in an Ageing Europe. WWWforEurope Policy Brief No. 7," WIFO Studies, WIFO, number 58161, April.
    2. Peter Mayerhofer & Matthias Firgo & Stefan Schönfelder, 2015. "Vierter Bericht zur internationalen Wettbewerbsfähigkeit Wiens," WIFO Studies, WIFO, number 60625, April.

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