Why Doesn't Labor Flow from Poor to Rich Countries? Micro Evidence from the European Integration Experience
AbstractJoining the EU is a natural experiment that drastically opens the borders of richer European countries to immigration.� However, migration flows from southern Europe responded little to� free migration after 1986, despite substantial differentials in real GDP per worker.� The simple explanation we propose for this puzzle is migration costs.� We explore the implications of our costly migration model by combining individual information from two household survey datasets (Luxembourg Income Study and European Community Household Panel).� In estimating wage differentials, we account for observable characteristics, unobservable heterogeneity, and assimilation of immigrants.� Based on our theoretical framework, we identify individual migration costs: they seem to be smaller for the young and educated.� Nevertheless, we find a negative pattern of self-selection: less able workers appear to be more likely to leave.� Our results point to the importance of micro characteristics of potential migrants in determining the effectiveness of free migration policies.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 402.
Date of creation: 01 Aug 2008
Date of revision:
International Migration; Economic Integration; Free Migration Policy; Wage Differentials; Migrant Self-Selection; Migration Costs; European Union;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-EEC-2008-09-13 (European Economics)
- NEP-LAB-2008-09-13 (Labour Economics)
- NEP-MIG-2008-09-13 (Economics of Human Migration)
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