Sizing it Up: Labor Migration Lessons of the EU Enlargement to 27

Abstract

While economists were pointing out the advantages of the EU enlargement, politicians and policymakers were raising grave concerns about the significant political and economic differences between the newcomer states (EU12) and the "old Europe" of EU15. The major point of apprehension was related to the labor markets. Visceral fear rendered more than one in two Europeans to believe that the EU enlargement contributed to job losses in their own country. Some EU15 member states opted for transitional arrangements and did not allow labor mobility from the EU12. This chapter reviews the achievements of the first five years of the EU27 and assesses and evaluates the effectiveness of the enforced policies while it identifies winner and losers. Overall, the EU enlargement did not produce any negative effects or disruptions in the labor markets of the Member States. All three agents, the migrants, the receiving countries, and the sending countries gained from labor mobility. The EU15 countries with closed door policy lost in high-skilled labor and their labor markets experienced a delayed adjustment that overlapped with the global crisis and exacerbated negativity. As self-employed labor was not under the same mobility Act, the self-employed were able to move to the country they were needed and open successful businesses. The global crisis tainted the rosy results of the enlargement and left the EU27 vulnerable to shocks.

Keywords: labor mobility, labor policy, EU enlargement, wages, international migration, remittances

JEL Classification: J6, J3, F22, F24