Does emigration benefit the stayers? Evidence from EU enlargement

Abstract

Around 9 % of the Lithuanian workforce emigrated to Western Europe after the enlargement of the European Union in 2004. I exploit this emigration wave to study the effect of emigration on wages in the sending country. Using household data from Lithuania and work permit and census data from the UK and Ireland, I demonstrate that emigration had a significant positive effect on the wages of stayers. A one-percentage-point increase in the emigration rate predicts a 0.67 % increase in real wages. This effect, however, is only statistically significant for men.

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Notes

  1. 1.

    See Kerr and Kerr (2011) and Clemens (2011) for reviews of the literature on the economic effects of migration on receiving and sending countries.

  2. 2.

    In a recent paper, Gagnon (2011) uses the emigration wave from Honduras after Hurricane Mitch and finds wage effects that are similar to those in this paper.

  3. 3.

    Own calculations from Eurostat.

  4. 4.

    Hungary and the Czech Republic, on the contrary, had outflows of less than 1 %.

  5. 5.

    See Constant (2011) for a review of the most recent literature and Kahanec and Zimmermann (2009) for a collection of country studies on EU enlargement. Barrell et al. (2010) illustrate the macroeconomic consequences of migration on the sending and receiving countries.

  6. 6.

    The entire section on data is similar to Elsner (2011), which uses the same data sources.

  7. 7.

    For further information about PPS and NINo numbers, see http://www.welfare.ie and http://www.direct.gov.uk. In 2004 the UK introduced a Worker Registration Scheme (WRS) for workers from the new member states. Compared to the data from the WRS, NINo offers the advantage that it provides information on immigration before 2004. The WRS and NINo numbers after 2004 are similar.

  8. 8.

    Double counts are only possible if workers received a work permit in both destination countries. Although there does not seem to be any evidence of large numbers of workers registering in both countries, I am aware that double counting could lead to a downward bias in the estimates.

  9. 9.

    Other UK datasets, the Labour Force Survey and the European Community Household Panel have few observations on immigrants in each round, and they group immigrants from Eastern Europe by region, not by country.

  10. 10.

    \(\frac{\textrm{NINO}_{2003}}{\textrm{PPS}_{2002}}\) actually consists of two factors: \(\frac{\textrm{NINO}_{2003}}{\textrm{PPS}_{2003}}\), which accounts for the size of migrant flows to the UK relative to Ireland and \(\frac{\textrm{PPS}_{2003}}{\textrm{PPS}_{2002}}\), accounting for the change in migration flows to Ireland from 2002 to 2003. By multiplication of those two terms, PPS2003 cancels out.

  11. 11.

    The sampling weight p ghijt is the inverse probability that observation i is included in the sample.

  12. 12.

    Source: Statistics Lithuania.

  13. 13.

    Sources: statistical offices of the respective countries. For Denmark, the flows have been calculated from the difference in stocks. Tables can be produced upon request.

  14. 14.

    See the Online Appendix 1 for a detailed description of the educational tracks.

  15. 15.

    See Friedberg and Hunt (1995) and Kerr and Kerr (2011) for a review of this literature and Longhi et al. (2010) for a meta-analysis.

  16. 16.

    Between 2004 and 2006, Lithuania received EU structural funds of EUR 1.5 billion, which is 8 % of the country’s real GDP in 2004. The largest share of the funds, which were spread across 3,500 projects, went into infrastructure projects (European Commission 2007).

  17. 17.

    Figure 1 in the Online Appendix plots separate wage distributions for men and women. For men, there have been some changes to the left of the mean, but no substantial shifts in the probability mass. By contrast, for women the probability mass moved to the left of the mean, indicating a positive selection.

  18. 18.

    In 2004, minimum wages were EUR 7 in Ireland and GBP 4.85 in the UK.

  19. 19.

    Sources: Statistics Lithuania. Table available on request.

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Acknowledgements

I am grateful to Gaia Narciso for all her support and encouragement. I would also like to thank the editor, three anonymous referees, Catia Batista, Karol Borowiecki, John FitzGerald, Ulrich Gunter, Julia Anna Matz, Corina Miller, Mrdjan Mladjan, Alfredo Paloyo, Todd Sorensen, Pedro Vicente, and Michael Wycherley, as well as the seminar participants at the 6th ISNE conference in Limerick/IE, the 3rd RGS doctoral conference in Bochum/GER, the 24th Irish Economic Association annual conference in Belfast/UK, and the TCD Development Working Group for helpful comments. The Lithuanian and Irish Statistical Offices were very helpful in providing the data. The author gratefully acknowledges funding from the Irish Research Council for the Humanities & Social Sciences and the Department of Economics at Trinity College Dublin. The paper has been accepted before the author took up a research position at IZA.

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Correspondence to Benjamin Elsner.

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Responsible editor: Klaus F. Zimmermann

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Elsner, B. Does emigration benefit the stayers? Evidence from EU enlargement. J Popul Econ 26, 531–553 (2013). https://doi.org/10.1007/s00148-012-0452-6

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Keywords

  • Emigration
  • EU enlargement
  • Labor mobility