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The impact of MENA-to-EU migration in the context of demographic change

Frédéric Docquier () and Luca Marchiori ()

CREA Discussion Paper Series from Center for Research in Economic Analysis, University of Luxembourg

Abstract: In this paper, we analyze the consequences of increasing MENA-to-EU migration flows on both sending and receiving regions. In the first part of the paper, we characterize the structure of MENA emigration as well as the demographic trends in the EU and MENA. We show that EU27 is a major destination for 9 MENA countries, including Algeria, Egypt, Morocco and Tunisia. Potential increased flows of MENA-to-EU migration in the future would in all probability particularly impact these countries. Moreover, replacement migration policies encouraging MENA-to-EU flows of working-age people would need to be temporary, as MENA countries themselves will be facing labor shortages in the future. In the second part of the paper, we analyze the economic effects of increased migration using a general equilibrium model. We find that increasing MENA-to-EU migration would generate significant changes in EU15 tax rates and GNI per capita, smoothing the fiscal and economic burdens of aging. Compared to a non-selective immigration shock, selecting immigrants has a moderate impact in reducing tax rates, but leads to a greater impact on GNI per capita in the EU15. On the other hand, increases in emigration, without some compensating policies on education, would have a strong detrimental impact on MENA tax rates, especially if emigrants are high-skilled. Regarding GNI per capita and inequality in MENA, increasing low-skilled emigration leads to strong improvements (mainly due to remittances) while increasing high-high-skilled emigration induces detrimental consequences. Finally, the negative effects of a more selective migration policy in MENA may be considerably mitigated if the brain drain leads to sideeffects or is accompanied by increased education attainment at origin. In particular, our results suggest that a stronger partnership between EU15 and selected MENA countries, involving more high-skilled migration and a greater cooperation in human capital formation, could raise the welfare of all parties concerned.

New Economics Papers: this item is included in nep-ara and nep-mig
Date: 2010
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Journal Article: The impact of MENA-to-EU migration in the context of demographic change (2012) Downloads
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