Skill Diffusion by Temporary Migration? Returns to Western European Work Experience in Central and East European Countries
This paper contributes to the debate on the effects of migration by providing evidence on the returns to working experience from western Europe in eastern European labour markets. In particular, using the 2003 Youth Central and Eastern Eurobarometer dataset, we test the hypothesis that there are differential returns to foreign as opposed to domestic work experience. Our analysis combines the Mincer wage equation framework and the Roy model of migration. The latter suggests that migration responds to net expected benefits. Hence, return migration is endogenous with respect to differential returns to foreign working experience. To allow for selectivity on observable or unobservable characteristics, we estimate an endogenous switching model in two steps. This procedure combines probit estimates of propensities to work and to acquire foreign work expericence respectively, and OLS estimates of earnings equations for stayers and movers, with the inclusion of nonselection hazards obtained in the first step. The expected wage increase is the difference between post-return migrants' wages and wages under similar conditions in the absence of migration. For any individual, only one of these measures can be observed. We impute the respective counterfactuals from the separate wage regressions. Our analysis shows that movers and stayers are rewarded for different human capital characteristics. We find an average earnings premium for foreign work experience of around 30%. This can be seen as partial evidence for international skill diffusion temporary migrants may upgrade their skills by learning on the job in countries with higher technological development, and subsequently bring human capital to their source country, thus adding to know-how diffusion and the catching-up of their economy. We perform additional empirical analyses to support this interpretation we show that the premium found for return migration does not primarily reward the language proficiencies of returning migrants, and we further provide indicative evidence that no earnings premium is obtained for work-related stays abroad in other central and eastern European transition countries.
|Length:||43 pages including 14 Tables|
|Date of creation:||Jul 2008|
|Publication status:||Published as wiiw Working Paper|
|Contact details of provider:|| Postal: Rahlgasse 3, A-1060 Vienna|
Phone: (+43-1) 533 66 10
Fax: (+43-1) 533 66 10-50
Web page: http://www.wiiw.ac.at
More information through EDIRC
|Order Information:||Web: http://wiiw.ac.at|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-161, January.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
- Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
- Ira N. Gang & Catherine Y. Co & Myeong-Su Yun, 1999.
"Returns to Returning,"
Departmental Working Papers
199813, Rutgers University, Department of Economics.
- Alan Barrett & Philip J. O’Connell, 2001.
"Is There a Wage Premium for Returning Irish Migrants?,"
The Economic and Social Review,
Economic and Social Studies, vol. 32(1), pages 1-21.
- Barrett, Alan & O'Connell, Philip J., 2000. "Is There a Wage Premium for Returning Irish Migrants?," IZA Discussion Papers 135, Institute for the Study of Labor (IZA).
- Barrett, Alan & O'Connell, Philip, 2000. "Is There A Wage Premium for Returning Irish Migrants?," CEPR Discussion Papers 2408, C.E.P.R. Discussion Papers.
- Alan Barrett & Philip J. O'Connell, 2000. "Is there a Wage Premium for Returning Irish Migrants?," Papers WP125, Economic and Social Research Institute (ESRI).
- Heitmueller, Axel, 2004. "Public-Private Sector Wage Differentials in Scotland: An Endogenous Switching Model," IZA Discussion Papers 992, Institute for the Study of Labor (IZA).
- George J. Borjas & Bernt Bratsberg, 1994.
"Who Leaves? The Outmigration of the Foreign-Born,"
NBER Working Papers
4913, National Bureau of Economic Research, Inc.
- Dustmann, Christian & Kirchkamp, Oliver, 2002.
"The optimal migration duration and activity choice after re-migration,"
Journal of Development Economics,
Elsevier, vol. 67(2), pages 351-372, April.
- Dustmann, Christian & Kirchkamp, Oliver, 2000. "The Optimal Migration Duration and Activity Choice after Re-migration," Sonderforschungsbereich 504 Publications 00-39, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Dustmann, Christian & Kirchkamp, Oliver, 2000. "The optimal migration duration and activity choice after re-migration," Papers 00-39, Sonderforschungsbreich 504.
- Dustmann, Christian & Kirchkamp, Oliver, 2001. "The Optimal Migration Duration and Activity Choice after Re-migration," IZA Discussion Papers 266, Institute for the Study of Labor (IZA).
- Matloob Piracha & Augustin de Coulon, 2003.
"Self-Selection and the Performance of Return Migrants: the Source Country Perspective,"
CEP Discussion Papers
dp0576, Centre for Economic Performance, LSE.
- Augustin Coulon & Matloob Piracha, 2005. "Self-selection and the performance of return migrants: the source country perspective," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(4), pages 779-807, November.
- Augustin De Coulon & Matloob Piracha, 2003. "Self-selection and the performance of return migrants: the source country perspective," LSE Research Online Documents on Economics 20040, London School of Economics and Political Science, LSE Library.
- Agnes Hars, 2003. "Channeled East-West labour migration in the frame of bilateral agreements," Budapest Working Papers on the Labour Market 0301, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
When requesting a correction, please mention this item's handle: RePEc:wii:wpaper:46. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Customer service)
If references are entirely missing, you can add them using this form.