Labor Market Effects of Open Borders: Evidence from the Finnish Construction Sector after EU Enlargement
104 Pages Posted: 7 Oct 2020 Last revised: 1 Jun 2022
Date Written: May 30, 2022
Abstract
The eastern enlargement of the EU differentially exposed workers in different regions and occupations in Finland to foreign workforce, in particular to posted workers. Using a triple-differences strategy and detailed individual-level administrative data, we document robust evidence that the entry of new EU countries decreased the annual earnings of vulnerable workers relative to less vulnerable workers in the construction sector. This decrease was persistent even ten years after the enlargement and economically meaningful, about 9 percent (roughly a month’s salary per year), on average. We also show a small increase in unemployment and provide evidence on different adjustment mechanisms.
Keywords: European Union, Labor Mobility, Migrant Workers, Open Borders, Temporary Migration
JEL Classification: C23, J61, J62, J82
Suggested Citation: Suggested Citation