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Labour Mobility and Labour Market Adjustment in the EU

Alfonso Arpaia (), Áron Kiss, Balazs Palvolgyi and Alessandro Turrini ()
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Balazs Palvolgyi: European Commission

No 396, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper assesses macroeconomic determinants of labour mobility and its role in the adjustment to asymmetric shocks. First, the paper develops stylised facts of mobility at the national and sub-national levels in the EU. Then, it explores the macroeconomic determinants of bilateral migration flows. Econometric evidence suggests that labour mobility increases significantly when a country joins the EU. While euro area membership seems not to be associated with an overall rise in the magnitude of mobility flows, workers do appear more ready to move from countries where unemployment is high to those where it is lower. Thirdly, the paper looks at mobility as a channel of economic adjustment by means of a VAR analysis in the vein of Blanchard and Katz (1992). Results indicate that mobility absorbs about a quarter of an asymmetric shock within 1 year. Movements in response to shocks have almost doubled since the introduction of the euro. Real wages have also become more responsive to asymmetric shocks during the same period.

Keywords: Labour mobility; geographic mobility; migration; gravity; adjustment; asymmetric shocks; optimal currency areas; European Union (search for similar items in EconPapers)
JEL-codes: J61 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-ger, nep-lab and nep-mig
Date: 2016-06-10, Revised 2016-06-10
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http://www.dagliano.unimi.it/media/WP2016_396.pdf (application/pdf)

Related works:
Journal Article: Labour mobility and labour market adjustment in the EU (2016) Downloads
Working Paper: Labour Mobility and Labour Market Adjustment in the EU (2015) Downloads
Working Paper: Labour mobility and labour market adjustment in the EU (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:396

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