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The consistency of EU foreign policies towards new member states

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  • Jean-Claude Berth�lemy
  • Mathilde Maurel

Abstract

This paper analyses the relation between transfers, migration and income levels. While European countries have been very generous by opening their frontiers to trade, investing in transition countries, and accepting as EU new members some of the latter, their migration policies were less liberal. The policy coherence debate is an old theme in the international economics literature, which is revisited here by looking at the relationships between aid and migration policies towards new member states. Are they substitutes or complements? What happens if eastern European labour markets conditions improve? In theory, potential migrants will stay home, and the concern of being invaded by skilled/unskilled workers searching for better conditions and higher wages in the old member states can be alleviated. But in practice, at low level or revenue in the origin countries, economic progress can result in lowering a budgetary constraint (potential migrants cannot afford the cost of moving), leading to more migration pressures. We therefore compute the critical level of GDP, above which an increase in European transfers and improvement in economic situation of the recipient country will not lead to an increase in migration pressures by decreasing the cost of moving. It amounts to 2837 $US for within European migration. We argue that this critical level is not the same for a skilled and for an unskilled individual. In other words, the critical revenue, under which a skilled individual with better opportunities abroad decides to migrate, will be higher than the critical revenue for an unskilled worker, who may be better off by staying home and looking for a job at home: US$15085 for the former, and US$ 4384 for the latter. This has an important implication, namely that in some cases, increasing financial transfers will result in increasing the gap between skilled and unskilled departures from countries suffering already from a brain drain phenomena.

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Bibliographic Info

Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 365.

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Length: 45 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:euf:ecopap:0365

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Keywords: Aid; Migration; Foreign policy coherence; The consistency of EU foreign policies towards new member states; Economic Papers;

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References

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  1. Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Growth. A Meta Study," Economics Working Papers 2005-13, School of Economics and Management, University of Aarhus.
  2. Richard H. Adams, Jr. & John Page, 2003. "International migration, remittances, and poverty in developing countries," Policy Research Working Paper Series 3179, The World Bank.
  3. Timothy J. Hatton & Jeffrey G. Williamson, 2002. "What Fundamentals Drive World Migration?," NBER Working Papers 9159, National Bureau of Economic Research, Inc.
  4. Martin Kahanec & Klaus F. Zimmermann, 2008. "Migration in an Enlarged EU: A Challenging Solution?," Discussion Papers of DIW Berlin 849, DIW Berlin, German Institute for Economic Research.
  5. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
  6. Michaël Freudenberg & Françoise Lemoine, 1999. "Central and Eastern European Countries in the International Division of Labour in Europe," Working Papers 1999-05, CEPII research center.
  7. David Karemera & Victor Iwuagwu Oguledo & Bobby Davis, 2000. "A gravity model analysis of international migration to North America," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1745-1755.
  8. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  9. Faini, Riccardo & Venturini, Alessandra, 1993. "Trade, aid and migrations: Some basic policy issues," European Economic Review, Elsevier, vol. 37(2-3), pages 435-442, April.
  10. Hatton, Timothy J. & Williamson, Jeffrey G., 1998. "The Age of Mass Migration: Causes and Economic Impact," OUP Catalogue, Oxford University Press, number 9780195116519, October.
  11. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
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