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Joining the EU: Capital Flows, Migration and Wages

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  • Catia Batista

Abstract

What is the impact of joining the European Union on a small, less developed economy? This is the general question driving this research paper. In particular, the role of factor movements in explaining real wage behavior in Portugal after its entry in the European Union (EU) is evaluated. Based on these results, counterfactual exercises are performed to measure the impact of foreign investment and emigration on skilled and unskilled wages between 1985 and 1999. We find a small role for labor movements, and a more important one for capital inflows. This should constitute a good starting point to think about the consequences of the Eastern enlargement of the EU and of other integration experiences that abolish barriers to factor mobility.

Suggested Citation

  • Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:342
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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper342.pdf
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    Cited by:

    1. Elsner, Benjamin, 2013. "Emigration and wages: The EU enlargement experiment," Journal of International Economics, Elsevier, vol. 91(1), pages 154-163.
    2. Marcel Fafchamps, 2009. "Human Capital, Exports, and Earnings," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 111-141, October.
    3. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
    4. Benjamin Elsner, 2010. "Does Emigration Benefit the Stayers? The EU Enlargement as a Natural Experiment. Evidence from Lithuania," The Institute for International Integration Studies Discussion Paper Series iiisdp326, IIIS.
    5. Catia Batista, 2008. "Why Doesn't Labor Flow from Poor to Rich Countries? Micro Evidence from the European Integration Experience," Economics Series Working Papers 402, University of Oxford, Department of Economics.

    More about this item

    Keywords

    International Migration; Capital Flows; Wages; Skill; Capital-Skill Complementarity; Economic Integration; European Union; Portugal;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F2 - International Economics - - International Factor Movements and International Business
    • 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, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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