The Free Movement of Workers in an Enlarged European Union: Institutional Underpinnings of Economic Adjustment

36 Pages Posted: 27 Sep 2014

See all articles by Martin Kahanec

Martin Kahanec

IZA Institute of Labor Economics; Central European University; Central European Labour Studies Institute

Mariola Pytliková

Central European Labour Studies Institute (CELSI); VSB - Technical University of Ostrava - Faculty of Economics; University College London - CReAM - Centre for Research and Analysis of Migration; IZA Institute of Labor Economics; Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Klaus F. Zimmermann

Global Labor Organization (GLO); UNU-MERIT; Maastricht University, Department of Economics; Free University Berlin; University of Bonn; Centre for Economic Policy Research (CEPR); Journal of Population Economics

Abstract

The eastern enlargements of the European Union (EU) and the extension of the free movement of workers to the new member states' citizens unleashed significant east-west migration flows in a labor market with more than half a billion people. Although many old member states applied transitional arrangements temporarily restricting the free movement of new member states' citizens, the need for adjustment became ever more important during the Great Recession, which affected EU member states unevenly.This chapter studies whether and how east-west migration flows in an enlarged EU responded to institutional and economic factors. We first develop a simple framework of adjustment through migration of workers between labor markets affected by asymmetric economic shocks. Using a new migration dataset and treating the EU enlargement and labor market openings towards the new EU members as a natural experiment allows us to estimate the effects of the EU accession and economic opportunities on migration.Applying the difference-in-differences and triple differences empirical modeling framework, we subsequently find that east-west migration flows in the EU responded positively to the EU entry and economic opportunities in receiving labor markets. However, this potential through which migration helped to ease the imbalances across EU labor markets was hampered by transitional arrangements, which negatively affected the flows of east-west migrants. We conclude that the free movement of workers is an asset that the EU needs to nurture as a means of adjusting to structural economic asymmetries as well as to short-run shocks across EU member states.

Keywords: natural experiment, Great Recession, determinants of migration, transitional arrangements, free movement of workers, EU eastern enlargement, difference-in-differences, migration policy

JEL Classification: F22, J61, J68

Suggested Citation

Kahanec, Martin and Pytliková, Mariola and Zimmermann, Klaus F., The Free Movement of Workers in an Enlarged European Union: Institutional Underpinnings of Economic Adjustment. IZA Discussion Paper No. 8456. Available at SSRN: https://ssrn.com/abstract=2502316

Martin Kahanec (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Central European University ( email )

Nador utca 9
Budapest, H-1051
Hungary

Central European Labour Studies Institute ( email )

Zvolenská 29
Bratislava, 82109
Slovakia

HOME PAGE: http://www.celsi.sk

Mariola Pytliková

Central European Labour Studies Institute (CELSI) ( email )

Zvolenská 29
Bratislava, 82109
Slovakia

VSB - Technical University of Ostrava - Faculty of Economics ( email )

Sokolska 33
Ostrava 1, 701 21
Czech Republic

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

Drayton House
30 Gordon Street
London, WC1H 0AX
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

Klaus F. Zimmermann

Global Labor Organization (GLO) ( email )

Bonn
Germany

HOME PAGE: http://https://glabor.org/

UNU-MERIT ( email )

Keizer Karelplein 19
Maastricht, 6211TC
Netherlands

Maastricht University, Department of Economics ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

University of Bonn

Postfach 2220
Bonn, D-53012
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Journal of Population Economics

Tiergartenstr. 17
D-69121 Heidelberg
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
76
Abstract Views
464
rank
329,894
PlumX Metrics