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Post-enlargement mobility brings economic benefits but may result in socioeconomic cleavages between migrants and natives. Using EU Labour Force Survey data and decomposition techniques, we distinguish between migrant–native gaps that can be explained by differences in observable characteristics and those that are due to unobservable factors such as disparities in social or ethnic capital, language skills or discrimination. We find that although observed factors explain some of the gaps, significant cleavages due to unobservable factors remain unexplained in relation to labour market participation and unemployment, self-employment, over-education, low-skill employment and temporary contracts. We conclude that equal treatment and skill mismatch remain key policy challenges for the EU. Chapter Download Publisher link

This chapter provides the historical context for the past half-century in Europe focusing specifically on the link between migration and economic development and inequality. The literature review suggests that there are several channels through which migration affects economic inequality between countries in one or the other direction. The net effects are an open empirical question and are likely to depend on the economic, demographic and institutional and policy contexts; sources, types and selectivity of migration, as well as responses of the receiving societies as well as migrants themselves. We undertake an empirical analysis and find that immigration has contributed to reducing inequality within the 25 EU countries over the 2003-2017 period. As the EU attracted relatively highly qualified immigrants throughout this period, our results are consistent with the ameliorating effect of skilled migration on within-country inequality, as predicted by theory. ; This chapter provides the historical context for the past half-century in Europe focusing specifically on the link between migration and economic development and inequality. The literature review suggests that there are several channels through which migration affects economic inequality between countries in one or the other direction. The net effects are an open empirical question and are likely to depend on the economic, demographic and institutional and policy contexts; sources, types and selectivity of migration, as well as responses of the receiving societies as well as migrants themselves. We undertake an empirical analysis and find that immigration has contributed to reducing inequality within the 25 EU countries over the 2003-2017 period. As the EU attracted relatively highly qualified immigrants throughout this period, our results are consistent with the ameliorating effect of skilled migration on within-country inequality, as predicted by theory.

Since the fall of the communist regimes in Central and Eastern Europe in 1989, neoliberal discourse has dominated among the political elite in the post-communist countries, paving the way for unprecedented mass privatisation, economic deregulation, and other market reforms. In this paper, we study the development of public support for market economy principles in post-communist countries compared to other European countries during the 1999-2008 period, which is the period that directly followed the initial stage of market transformation. We use data from the European Value Survey covering 22 European countries for the years 1999/2000 and 2008/2009. In addition to analysing the trends, we apply multilevel regression models to study the determinants and levels of support for the market economy in post-communist and other European countries. We find that, when controlling for individual and country-level variables, a significant increase in support for market economy principles has taken place in the post-communist cluster, which is not the case in the other countries. There is some inconsistency in support for the individual principles of market economics: support exists in post-communist countries for the notion that the state should be responsible for the social and economic well-being of its inhabitants and for state regulation of the economy, while support is high for some market economy principles, such as free competition and private ownership. In other words, support for some kind of social market seems to dominate the views of those living in post-communist countries, in which the state should combine a market economy with relatively generous social policies.

The understanding of how institutional and policy contexts affect immigrant integration is essential for any effort to foster a sustainable and effective migration and integration policy framework. Immigrant-native labor market gaps may arise due to differences in human capital or other socio-economic and demographic characteristics, but also due to differentiated impacts of institutions and policies on otherwise similar immigrants and natives. Different integration policy approaches are needed to close the gaps arising through these different mechanisms. This paper exploits the variation across Europe to study the institutional and policy determinants of immigrant-native gaps in host labor markets. Using the EU Labor Source Survey as the primary source of data and a novel analytical approach we study immigrant-native gaps in labor force participation, unemployment, low-skilled employment and temporary employment and measure the contribution of institutional and policy contexts to the part of these gaps that cannot be explained by immigrant-native differences in characteristics. Our findings confirm that institutional and policy contexts play a significant role in immigrant integration, and highlight the importance of tailoring policy approaches with regard to the causes of immigrant-native gaps.

Theoretical arguments and previous country-level evidence indicate that immigrants are more fluid than natives in responding to changing labor shortages across countries, skill-groups or industries. The diversity across EU member states enables us to test this hypothesis across various institutional, economic and policy contexts. Drawing on the EU LFS and EU SILC datasets we study the relationship between residual wage premia as a measure of labor shortages in different skill-industry-country cells and the shares of migrants and natives working in these cells. We find that immigrants' responsiveness to labor market shortages exceeds that of natives in the EU15, in particular in member states with higher unemployment rates, higher levels of (recent) immigration, and more open immigration and integration policies; but also those with barriers to citizenship acquisition or family reunification. Whereas higher welfare expenditures seem to exert a lock-in effect, a comparison across different types of welfare states indicates that institutional complementarities neutralize that effect.

AbstractTheory asserts that individuals' migration decisions depend more on their expectations about future income levels than on their current income levels. We find that the implementation of market‐oriented reforms in post‐communist countries, by forming positive economic prospects, has reduced emigration as predicted by theory. Our estimates show that migration flows are highly responsive to reforms supporting private enterprises and financial services, which provide individuals with strong signals about their future prospects. We show that reforms that improve the management of infrastructure services have no link with migration patterns, which may be an important lesson for government policy.

We exploit a quasi-natural experiment that emerged during the Czech presidential run-off election to identify the impact of inaccurate and misleading information on electoral outcomes. A political campaign associated a vote for one of the candidates with a legally and politically unfounded risk relevant to people owning houses confiscated from ethnic Germans after the Second World War. Using municipalitylevel data in a difference-in-differences framework, our analysis suggests that the manipulative campaign affected the electoral outcomes and increased voter turnout in municipalities with a higher share of voters at risk of the unproven threat to housing ownership.

Expansion of the public sector and redistributive policies may reduce income inequality, but formal tests suffer from the problem of endogeneity of government size with respect to the distribution of income. Studying 30 European countries over the period 2004-2015, we apply instrumental variable estimation techniques to identify a causal relationship between income inequality and government size, measured as the government expenditure share in GDP. Using a novel instrument – the number of political parties in the ruling coalition – we find that accounting for the possible endogeneity of government size increases the magnitude of the estimated negative effects. Our findings thus suggest that much of the literature underestimates the true role of the government in attenuating income inequality. The estimated relationship between income inequality and government size persists in a series of robustness checks.

Theory asserts that individuals' migration decisions depend more on their expectations about future income levels than on their current income levels. We find that the implementation of market-oriented reforms in post-communist countries, by forming good economic prospects, has reduced emigration as predicted by theory. Our estimates show that migration flows are highly responsive to reforms supporting private enterprises and financial services, which provide individuals with strong signals about their future prospects. Reforms that improve the management of infrastructure services are shown to have no link with migration patterns and this may be an important lesson for government policy.

Expansion of the public sector and redistributive policies may reduce income inequality, but formal tests suffer from the problem of endogeneity of government size with respect to the distribution of income. Studying 30 European countries over the period 2004-2015, we apply instrumental variable estimation techniques to identify a causal relationship between income inequality and government size, measured as the government expenditure share in GDP. Using a novel instrument – the number of political parties in the ruling coalition – we find that accounting for the possible endogeneity of government size increases the magnitude of the estimated negative effects. Our findings thus suggest that much of the literature underestimates the true role of the government in attenuating income inequality. The estimated relationship between income inequality and government size persists in a series of robustness checks.

Expansion of the public sector and redistributive policies may reduce income inequality, but formal tests suffer from the problem of endogeneity of government size with respect to the distribution of income. Studying 30 European countries over the period 2004-2015, we apply instrumental variable estimation techniques to identify a causal relationship between income inequality and government size, measured as the government expenditure share in GDP. Using a novel instrument the number of political parties in the ruling coalition we find that accounting for the possible endogeneity of government size increases the magnitude of the estimated negative effects. Our findings thus suggest that much of the literature underestimates the true role of the government in attenuating income inequality. The estimated relationship between income inequality and government size persists in a series of robustness checks.

The economic literature starting with Borjas (2001) suggests that immigrants are more flexible than natives in responding to changing sectoral, occupational, and spatial shortages in the labor market. In this paper, we study the relative responsiveness to labor shortages by immigrants from various origins, skills and tenure in the country vis-à-vis the natives, and how it varied over the business cycle during the Great Recession. We show that immigrants in general have responded to changing labor shortages across EU member states, occupations and sectors more fluidly than natives. This effect is especially significant for low-skilled immigrants from the new member states or with the medium number of years since immigration, as well as with high-skilled immigrants with relatively few (1-5) or many (11+) years since migration. The relative responsiveness of some immigrant groups declined during the crisis years (those from Europe outside the EU or with eleven or more years since migration), whereas other groups of immigrants became particularly fluid during the Great Recession, such as those from new member states. Our results suggest immigrants may play an important role in labor adjustment during times of asymmetric economic shocks, and support the case for well-designed immigration policy and free movement of workers within the EU. The paper provides new insights into the functioning of the European Single Market and the roles various immigrant groups play for its stabilization through labor adjustment during times of uneven economic development across sectors, occupations, and countries.

The economic literature starting with Borjas (2001) suggests that immigrants are more flexible than natives in responding to changing sectoral, occupational, and spatial shortages in the labor market. In this paper, we study the relative responsiveness to labor shortages by immigrants from various origins, skills and tenure in the country vis-à-vis the natives, and how it varied over the business cycle during the Great Recession. We show that immigrants in general have responded to changing labor shortages across EU member states, occupations and sectors more fluidly than natives. This effect is especially significant for low-skilled immigrants from the new member states or with the medium number of years since immigration, as well as with high-skilled immigrants with relatively few (1-5) or many (11+) years since migration. The relative responsiveness of some immigrant groups declined during the crisis years (those from Europe outside the EU or with eleven or more years since migration), whereas other groups of immigrants became particularly fluid during the Great Recession, such as those from new member states. Our results suggest immigrants may play an important role in labor adjustment during times of asymmetric economic shocks, and support the case for well-designed immigration policy and free movement of workers within the EU. Paper provides new insights into the functioning of the European Single Market and the roles various immigrant groups play for its stabilization through labor adjustment during times of uneven economic development across sectors, occupations, and countries.