Macroeconomic consequences of migration diversion: a CGE simulation for Germany and the UK

Timo Baas and Herbert Brücker ()

No 200803, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU Eastern Enlargement. The EU has agreed with the new member states from Central and Eastern Europe transitional periods for the free movement of workers. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU: Germany as the main destination before enlargement attracts only modest immigration flows since 2004, while the UK and Ireland which have been only marginally affected by immigration prior to enlargement absorb about 60% of the inflows in the post-enlargement period. The macroeconomic effects of this diversion process is analysed in this paper on the basis of a CGE model which considers wage rigidities. We find that higher migration is associated with larger GDP and employment gains, but also with a smaller wage increase and a smaller decline of the unemployment rate. The diversion of migration flows away from Germany towards the UK yields thus a higher GDP and employment growth in the UK. The joint GDP of Germany and the UK declines by 0.1 per cent as a consequence of the migration restrictions." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Großbritannien; Irland; Osteuropa; Auswirkungen; Beschäftigungseffekte; Beschäftigungsentwicklung; Bruttoinlandsprodukt; Einwanderung; EU-Osterweiterung; Europäische Union; internationale Migration; internationaler Vergleich; Lohnentwicklung; Mobilitätsbarriere; Ost-West-Wanderung; Arbeitskräftemobilität; Arbeitslosigkeit; Arbeitsmarktentwicklung; Wirtschaftsentwicklung; 2004-2011 (search for similar items in EconPapers)
JEL-codes: C68 F15 F22 J30 J61 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008
New Economics Papers: this item is included in nep-cmp, nep-eec, nep-lab, nep-mac and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:200803

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