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Labour Mobility: Is the euro boosting mobility? Labour mobility in Europe during the crisis years

Jörn Quitzau, Christina Boll () and Julian Leppin

No 19e, Strategy 2030 - Wealth and Life in the Next Generation from Hamburg Institute of International Economics (HWWI) and Berenberg

Abstract: Workers in Europe have responded to the euro crisis. Cross-border migration flows have changed considerably over recent years. However, the single currency has not yet given mobility within the eurozone a direct, visible boost. Instead, the euro crisis primarily diverted the migration flows from the new EU member states in central and eastern Europe. Instead of heading for Spain, Ireland and Italy, workers from the accession countries are now going to other countries in Europe. Some workers from central and eastern Europe have even returned to their home countries from the countries hit by the euro crisis or moved on to other European states. This redirection of the migration flows from central and eastern Europe after 2007 is playing a much greater role in labour mobility in Europe than direct internal migration from the countries badly affected by the euro crisis to economically stronger eurozone countries. Employment and incomes are the actual drivers of labour mobility in Europe. The currency is not an issue in this regard. People go where the jobs are. In addition, the persistent income gap between the countries of central and eastern Europe and western Europe is acting as a lever initiating migration. The migration balances of the crisis-hit countries have come under pressure from two sources: fast-falling immigration figures coupled with rapidly rising emigration at the same time. A number of previously popular countries for immigration, like Spain, turned into net emigration countries during the crisis. Workers are reacting to the crisis. Migrants from the new member states in central and eastern Europe have proven to be especially mobile. They head for those eurozone countries where the labour market gives them opportunities, and they leave those countries again when the situation on the labour market deteriorates badly. Migrants are increasingly young and well educated. In general, a positive selection can be observed among emigrants, measured by the distribution of education in their home countries. Highly skilled migrants are in some cases buying their job by working below their formal qualifications at the new place of work. At the same time, a job for which they are actually overqualified is the better choice for them, provided this represents the (only) alternative to unemployment in the short run. In addition, the gap between skills offered and those demanded by the labour market widened rapidly during the crisis, especially in the crisis-hit countries but also in the eurozone overall. The skill mismatch implies high structural deficits on the labour markets in the eurozone that cannot be overcome by more labour mobility alone. The rising average age of the population is likely to dampen labour mobility within Europe in the future. This makes it all the more important to address structural reforms in order to boost employment growth in Europe and the eurozone. Mobility within Europe remains a complex phenomenon, driven by a range of factors. For this reason, it is also hard to predict migration flows going forward.

Date: 2014
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