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Emigration and Wages: The EU Enlargement Experiment

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  • Elsner, Benjamin

Abstract

The enlargement of the European Union in 2004 caused a large migration wave from Central Europe to Ireland and the UK. This paper addresses the question whether such an emigration wave changes the wage distribution in the source country. In a theoretical model of a labor market I show that some groups of stayers gain, while others lose from emigration. This outcome depends on the degree of subsitutability between different groups of workers, as well as on skill distribution of emigrants. Using microdata from Lithuania, I simulate the post-2004 emigration wave based on the theoretical model and calculate the resulting changes in wages for different groups of workers. I nd that the wages of young workers increased by around 6% while the wages of older workers decrease by around 2%. The wage increase for young workers is the result of the supply shift: most of the emigrants were young, so that young workers who stay behind become a more scarce resource in the labor market. At the same time, the emigration of young workers decreases the labor demand for older workers, which results in a decrease of their wages. --

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Bibliographic Info

Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis with number 48716.

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Date of creation: 2011
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Handle: RePEc:zbw:vfsc11:48716

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Web page: http://www.socialpolitik.org/
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Keywords: Emigration; EU Enlargement; European Integration; Wage Distribution;

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References

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  1. Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 69-113, 01.
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  4. Gianmarco I. P. Ottaviano & Francesco D’Amuri & Giovanni Peri, 2008. "The Labor Market Impact of Immigration in Western Germany in the 1990’s," Working Papers 2008.16, Fondazione Eni Enrico Mattei.
  5. Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," Finnish Economic Papers, Finnish Economic Association, vol. 24(1), pages 1-32, Spring.
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  7. Alan Barrett & David Duffy, 2007. "Are Ireland's Immigrants Integrating into its Labour Market?," Papers WP199, Economic and Social Research Institute (ESRI).
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  13. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics.
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  15. Mishra, Prachi, 2007. "Emigration and wages in source countries: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 82(1), pages 180-199, January.
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  17. Gordon H. Hanson & Craig McIntosh, 2007. "The Great Mexican Emigration," NBER Working Papers 13675, National Bureau of Economic Research, Inc.
  18. Hazans, Mihails & Philips, Kaia, 2011. "The Post-Enlargement Migration Experience in the Baltic Labor Markets," IZA Discussion Papers 5878, Institute for the Study of Labor (IZA).
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  20. Jason Gagnon, 2011. "“Stay With Us?” The Impact of Emigration on Wages in Honduras," OECD Development Centre Working Papers 300, OECD Publishing.
  21. Benjamin Elsner, 2010. "Does Emigration Benefit the Stayers? The EU Enlargement as a Natural Experiment. Evidence from Lithuania," Working Papers 2010.151, Fondazione Eni Enrico Mattei.
  22. Abdurrahman Aydemir & George J. Borjas, 2007. "Cross-Country Variation in the Impact of International Migration: Canada, Mexico, and the United States," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 663-708, 06.
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Cited by:
  1. Elsner, Benjamin, 2012. "Does Emigration Benefit the Stayers? Evidence from EU Enlargement," IZA Discussion Papers 6843, Institute for the Study of Labor (IZA).
  2. Christian Dustmann & Tommaso Frattini & Anna Rosso, 2012. "The Effect of Emigration from Poland on Polish Wages," CReAM Discussion Paper Series 1229, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Amalia Cristescu & Maria Denisa Vasilescu & Larisa Stanila & Madalina Ecaterina Popescu, 2013. "Regional Analysis Of The Real Earnings In Romania," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 7(2), pages 58-78, DECEMBER.
  4. Elsner, Benjamin & Zimmermann, Klaus F., 2013. "10 Years After: EU Enlargement, Closed Borders, and Migration to Germany," IZA Discussion Papers 7130, Institute for the Study of Labor (IZA).
  5. Francine D. Blau & Lawrence Kahn, 2013. "Immigration and the Distribution of Incomes," CESifo Working Paper Series 4561, CESifo Group Munich.

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