Share:


The impact of EU immigration on economic growth through the skill composition channel

    Andreea Claudia Șerban Affiliation
    ; Mirela Ionela Aceleanu Affiliation
    ; Andrei Silviu Dospinescu Affiliation
    ; Diana-Mihaela Țîrcă Affiliation
    ; Isabel Novo-Corti Affiliation

Abstract

The paper aims to examine the new trends of immigration and their implications on the economy of the host country, particularly on economic growth and unemployment. As the effects of aging population can be felt in many countries, especially in developed ones, migration will continue to play an increasing role in the economic growth of all countries, either sending or receiving. Given the changes in migration trends and migration policies, the impact of the process should be revised. One of the main characteristics that significantly impacts economic growth is the education and skill level of immigrants. In the light of this fact, the research aims to identify the impact of immigration on growth through the skill composition channel. We analyzed the impact of skilled and unskilled immigration on growth, also including the unemployment rate as a relevant factor for the labour market. We estimated six dynamic panel models using the system of generalised method of moments (GMM) to take into account the risk of an endogeneity bias of the migration variables. The results indicate a positive and significant effect of skilled immigration on the economic growth of the receiving country. The results also point to a 1.3 percent β-convergence rate consistent with the values found in the convergence literature which are around 2 percent.

Keyword : migration, immigration, labour market, unemployment, European Union

How to Cite
Șerban, A. C., Aceleanu, M. I., Dospinescu, A. S., Țîrcă, D.-M., & Novo-Corti, I. (2020). The impact of EU immigration on economic growth through the skill composition channel. Technological and Economic Development of Economy, 26(2), 479-503. https://doi.org/10.3846/tede.2020.11954
Published in Issue
Feb 25, 2020
Abstract Views
677
PDF Downloads
226
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Ager, P., & Bruckner, M. (2013). Cultural diversity and economic growth: Evidence from the US during the age of mass migration. European Economic Review, 64, 76–97. https://doi.org/10.1016/j.euroecorev.2013.07.011

Alesina, A., Harnoss, J., & Rapoport, H. (2016). Birthplace diversity and economic prosperity. Journal of Economic Growth, 21(2), 101–138. https://doi.org/10.1007/s10887-016-9127-6

Algan, Y., Bisin, A., Manning, A., & Verdier, T. (2013). Cultural integration of immigrants in Europe. Oxford University Press. https://doi.org/10.1093/acprof:oso/9780199660094.001.0001

Andersen, T., & Dalgaard, C. J. (2011). Flows of people, flows of ideas, and the inequality of nations. Journal of Economic Growth, 16, 1–32. ttps://doi.org/10.1007/s10887-011-9060-7

Anderson, B., & Blinder, S. (2017). Who counts as a migrants? Definitions and their consequences. Migration Observatory Briefing, COMPAS. University of Oxford, UK. January 2017. https://migrationobservatory.ox.ac.uk/wp-content/uploads/2016/04/Briefing-Who_Counts_Migrant.pdf

Armstrong, H. W., & Read, R. (2002). The phantom of liberty? Economic growth and the vulnerability of small states. Journal of International Development, 14(4), 435–458. https://doi.org/10.1002/jid.886

Barro, R. J., & Sala-i-Martin, X. X. (1992). Convergence. Journal of Political Economy, 100(2), 223–251. https://doi.org/10.1086/261816

Bell, M., Charles-Edwards, E., Ueffing, P., Stillwell, J., Kupiszewski, M., & Kupiszewska, D. (2016). Internal migration and development: comparing migration intensities around the world. Population and Development Review, 41(1), 33–58. https://doi.org/10.1111/j.1728-4457.2015.00025.x

Bhagwati, J. (Ed.). (1982). Import competition and response. University of Chicago Press. https://doi.org/10.7208/chicago/9780226045405.001.0001

Bilan, Y. (2012). Specificity of border labour migration. Transformation in Business & Economics, 11(2), 82–97.

Blossfeld, H. P., & Mayer, K. U. (1988). Labor market segmentation in the Federal Republic of Germany: An empirical study of segmentation theories from a life course perspective. European Sociological Review, 4(2), 123–140. https://doi.org/10.1093/oxfordjournals.esr.a036472

Bødker, S., Jacobsen, R. H., & Skaksen, J. R. (2013). Fiscal costs and benefits of high skilled immigration to a generous welfare state (Norface Migration Discussion Paper No. 2013-06). http://www.norface-migration.org/publ_uploads/NDP_06_13.pdf

Bodvarsson, O. B., & Van den Berg, H. (2013). Economic growth and immigration. In The economics of immigration (pp. 217–248). Springer. https://doi.org/10.1007/978-1-4614-2116-0

Bonifazi, C., Okolzi, M., Schoorl, J., & Simon, P. (2008). International migration in Europe. New trends and new methods of analysis. Amsterdam University Press. https://doi.org/10.1515/9789048501540

Borjas, G. (1987). Self-selection and the earnings of immigrants. American Economic Review, 77(4), 531–553. https://doi.org/10.3386/w2248

Borjas, G. (1999a). Immigration and welfare magnets. Journal of Labor Economics, 17(4), 607–637. https://doi.org/10.1086/209933

Borjas, G. J. (1999b). The economic analysis of immigration. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (pp. 1697–1760). North Holland. https://doi.org/10.1016/S1573-4463(99)03009-6

Boubtane, E., Dumont, J., & Rault, C. (2014). Immigration and economic growth in the OECD countries, 1986–2006. (IZA Discussion Papers No. 8681). The Institute for the Study of Labor, Bonn, Germany. http://ftp.iza.org/dp8681.pdf

Bratsberg, B., Raaum, O., & Roed, K. (2014). Immigrants, labour market performance and social insurance. Economic Journal, 124(580), 644–683. https://doi.org/10.1111/ecoj.12182

Brunow, S., Nijkam, P., & Poot, J. (2015). The impact of international migration on economic growth in the global economy. In Handbook of the economics of international migration (Vol. 1, Chapter 19, pp. 1027–1075). Elsevier. https://doi.org/10.1016/B978-0-444-53768-3.00019-9

Burzynski, M. (2018). Time, space, and skills in designing migration policy. Journal of Demographic Econimics, 84(4), 355–417. https://doi.org/10.1017/dem.2018.5

Castles, S., & Vezzoli, S. (2009). The global economic crisis and migration: temporary interruption or structural changes? Paradigmes, 2, June 2009.

Centre for Economic Performance London School of Economics. (2016, June). Brexit 2016. Policy analysis from the Center of Economic Performance. http://cep.lse.ac.uk/pubs/download/brexit08_book.pdf

Chiswick, B. R. (2000). Are immigrants favorably self-selected? An economic analysis. In C. D. Brettell & J. F. Hollifield (Eds.), Migration theory: Talking across the disciplines (pp. 56–72). Routledge Press.

Chiswick, B. R., & Hatton, T. (2003). International migration and the integration of labor markets. In M. D. Bordo, A. M. Taylor, & J. G. Williamson, Globalization in historical perspective. University of Chicago Press. https://doi.org/10.7208/chicago/9780226065991.003.0003

Constant, A. (2014). Do migrants take the jobs of natives workers? IZA World of Labor. https://doi.org/10.15185/izawol.10

Coulter, S. (2018). Skillformation, immigration and European intergration: The politics of the UK growth model. New Political Economy, 23(2), 208–222. https://doi.org/10.1080/13563467.2017.1370446

Cuadros, A., Martin-Montaner, J., & Paniagua, J. (2019). Migration and FDI: The role of job skills. International Review of Economics & Finance, 59, 318–332. https://doi.org/10.1016/j.iref.2018.09.007

Dinu, M., Marinas, M. C., Socol, C., & Socol, A. (2012). Clusterization, persistence, dependency and volatility of business cycles in an enlarged euro area. Romanian Journal of Economic Forecating, 15(2), 5–23. http://www.ipe.ro/rjef.htm

Dinu, V., Grosu, R. M., & Săseanu, A. S. (2015). Romanian immigrant entrepreneurship: Utopia or reality? An overview of entrepreneurial manifestations of Romanian immigrants in Andalusia, Spain. Transformations in Business & Economics Journal, 14(1), 48–64.

Dobson, J. R., & Sennikova, I. (2007). From fundamental freedom to political and economic ‘hot potato’ in 50 years: Labour mobility and migration within the EU. Journal of Business Economics and Management, 8(2), 123–136. https://doi.org/10.3846/16111699.2007.9636160

Doeringer, P. B., & Piore, M. (1971). Internal labor markets and manpower analysis. Lexington Books.

Dolado, J., Goria, A., & Ichino, A. (1994). Immigration, human capital and growth in the host country: Evidence from pooled country data. Journal of Population Economics, 7, 193–215. https://doi.org/10.1007/BF00173619

Dustmann, C., & Gorlach, J. S. (2016). Estimating immigrant earnings profiles when migrations are temporary. Labour Economics, 41, 1–8. https://doi.org/10.1016/j.labeco.2016.05.023

Dustmann, C., & Frattini, T. (2013). Immigration: The European experience (IZA Discussion Papers No. 6261). The Institute for the Study of Labor, Bonn, Germany. http://ftp.iza.org/dp6261.pdf

Dustmann, C., Glitz, A., & Frattini, T. (2008). The labour market impact of immigration (Discussion Paper Series, CDP No. 11/08). Centre for Research and Analysis of Migration, London, UK. https://doi.org/10.1093/oxrep/grn024

European Commission. (2017). COMM. 10 trends shaping migration. European Commission. European Political Strategy Center, Bruxelles.

European Investment Bank. (2016). Migration in the EU. Challenges, opportunities and the role of EIB. Luxembourg. https://www.eib.org/attachments/migration_and_the_eu_en.pdf

European Movement International. (2016a). Free Movement and Schengen. A No Borders Europe. http://europeanmovement.eu/wp-content/uploads/2016/06/EMI_16_PolicyPosition_17_VIEW_Schengen_FINAL.pdf

European Movement International. (2016b). Migration and the refugees crisis. A European response. http://europeanmovement.eu/wp-content/uploads/2016/04/EMI_16_PolicyPosition_MIGRATION_VIEW_FINAL.pdf

Etzo, I. (2008). Internal migration: A review of the literature (MPRA Paper No. 8783).

Eurostat Statistics. (2017). Migration and citizenship data. http://ec.europa.eu/eurostat/web/population-demography-migration-projections/migration-and-citizenship-data

Fassio, C., Montobbio, F., & Venturini, A. (2019). Skilled migration and innovation in European industries. Research Policy, 48(3), 706–718. https://doi.org/10.1016/j.respol.2018.11.002

Favell, A. (2008). The new face of East–West migration in Europe. Journal of Ethnic and Migration Studies, 34(5), 701–716. https://doi.org/10.1080/13691830802105947

Felbermayr, G., Hiller, S., & Sala, D. (2010). Does immigration boost per capita income? Economics Letters, 107, 177–179. https://doi.org/10.1016/j.econlet.2010.01.017

Fix, M., Papademetriou, D. G., Batalova, J., Terrazas, A., Lin, S. Y., & Mittelstadt, M. (2009). Migration and the Great Recession. Migration Policy Institute, Washington, DC.

Fratesi, U., & Riggi, R. M. (2007). Does migration reduce regional disparities? The role of skill‐selective flows. Review of Urban and Regional Development Studies, 19(1), 78–102. https://doi.org/10.1111/j.1467-940X.2007.00125.x

Friedberg, R. M. (2000). You can’t take it with you? Immigrant assimilation and the portability of human capital. Journal of Labor Economics, 18(2), 221–251. https://doi.org/10.1086/209957

Fuest, C., & Thum, M. (1999). Welfare effects of immigrațion in a dual labor market (CESifo Working Paper No. 2015). Munich, Germany. https://www.cesifo-group.de/pls/guestci/download/F4490/MT_UNION2.PDF

Garcia-Rodriguez, Y., Mihi-Ramirez, A., & Navarro-Pobsdorf, M. (2015). Highly-skilled migration, migrant networks and the prestige of academic institutions. Inzinerine Ekonomika-Engineering Economics, 26(5), 500–506. https://doi.org/10.5755/j01.ee.26.5.12463

Gathmann, C. (2015). Naturalization and citizenship: Who benefits? IZA World of Labor. https://doi.org/10.15185/izawol.125

Green, C., Kler, P., & Leeves, G. (2007). Immigrant overeducation: Evidence from recent arrivals to Australia. Economics of Education Review, 26(4), 420–432. https://doi.org/10.1016/j.econedurev.2006.02.005

Grossmann, V. (2016). How immigration affects investment and productivity in host and home countries. IZA World of Labor. https://doi.org/10.15185/izawol.292

Herm A., & Poulain, M. (2012). Economic crisis and International Migration. What the EU data reveals? Revue Europeenne des Migrations Internationales, 28(4), 145–169. https://doi.org/10.4000/remi.6171

International Organization of Migration. (2017). World Migration Report 2018. Geneva. https://www.iom.int/sites/default/files/country/docs/china/r5_world_migration_report_2018_en.pdf

Josifidis, K., Supic, N., Pucar, E. B., & Srdic, S. (2014). Labour migration flows: EU8+2 vs EU-15. Journal of Business Economics and Management, 15(1), 41–55. https://doi.org/10.3846/16111699.2013.841283

Kahanec, M., & Kurekova, L. (2014). Did post-enlargement labor mobility help the EU to adjust during the great recession? The case of Slovakia (Discussion Paper No. 8249). The Institute for the Study of Labor. http://ftp.iza.org/dp8249.pdf

Kalaitzidakis, P., Mamuneas, T. P., Savvides, A., & Stengos, T. (2001). Measures of human capital and nonlinearities in economic growth. Journal of Economic Growth, 6(3), 229–254. https://doi.org/10.1023/A:1011347816503

Kanbur, R., & Rapoport, H. (2005). Migration selectivity and the evolution of spatial inequality. Journal of Economic Geography, 5(1), 43–57. https://doi.org/10.1093/jnlecg/lbh053

Kemnitz, A. (2003). Unemployment, technology and the welfare effects of immigration (Discussion papers). https://ub-madoc.bib.uni-mannheim.de/1000/1/611.pdf

Kumpikaite, V., & Zickute, I. (2012). Synergy of migration theories: Theoretical insights. Inzinerine Ekonomika-Engineering Economics, 23(4), 387–397. https://doi.org/10.5755/j01.ee.23.4.1240

Lofstrom, M. (2014). Immigrants and entreprenuership. IZA World of Labor.

Lu, H., Yue, A. L., Chen, H., & Long, R. Y. (2018). Could smog pollution lead to the migration of local skilled worked? Evidence from the Jing-Jin-Ji region in China. Resources Conservation and Recycling, 130, 177–187. https://doi.org/10.1016/j.resconrec.2017.11.024

Mandelman, F. S., & Zlate, A. (2017). The socio-economic impact of migration flows: Effects on trade, remittances, output, and the labour market. International Finance, 20(1), 100–112. https://doi.org/10.1111/infi.12105

Mankiw, N. G., Romer, D. H., & Weil, D. N. (1992). A Contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437. https://doi.org/10.2307/2118477

Markaki, Y., & Longhi, S. (2012). What determines attitudes to immigration in European countries? An Analysis at the regional level (Norface Migration Discussion Paper No. 2121–32).

McCann, P. (2001). Urban and regional economics. Oxford Publishing.

Mihi-Ramirez, A., Garcia-Rodriguez, Y., & Cuenca, E. (2016). Innovation and international high skilled migration. Inzinerine Ekonomika-Engineering Economics, 27(4), 452–461. https://doi.org/10.5755/j01.ee.27.4.14396

Mihi-Ramirez, A., Kumpikaite-Valiuniene, V., & Cuenca-Garcia, E. (2017). An inclusive analysis of determinants of international migration. The case of European rich and poor countries. Technological and Economic Development of Economy, 23(4), 608–626. https://doi.org/10.3846/20294913.2017.1306726

Mol, C., & Valk, H. (2016). Migration and immigrants in Europe: A historical and demographic perspective. In B. Garces-Mascarenas & R. Penninx (Eds.), Integration processes and policies in Europe. Springer International Publishing.

Müller, T. (1997). Migration, dual labour markets and social welfare in a small open economy. Cahier 97–13 du Centre de Recherche en Economie et Finance Appliquees CREFA (pp. 34–68). In R. Faini, J. de Melo, & K. F. Zimmermann (Eds.), Migration: The controversies and the evidence. Cambridge University Press. http://archive-ouverte.unige.ch/unige:35477

Naumann, E., Stoetzer, L. F., & Pietrantuono, G. (2018). Attitude towards highly skilled and low-skilled immigration in Europe: A survery experiment in 15 European countries. European Journal of Political Research, 57(4), 1009–1030. https://doi.org/10.1111/1475-6765.12264

Newbold, K. B. (2019). Short-term relocation versus long-term migration: Implications for economic growth and human capital change. Population Space and Place, 25(4), e2211. https://doi.org/10.1002/psp.2211

Nijkamp, P., & Poot, J. (1998). Spatial perspectives on new theories of economic growth. Annals of Regional Science, 32(1), 7–37. https://doi.org/10.1007/s001680050061

Oberman, K. (2015). Poverty and immigration policy. American Political Science Review, 109(2), 239– 251. https://doi.org/10.1017/S0003055415000106

Official Journal of European Union. (2007). Regulation (EC) No 862/2007 of the European Parliament and The Council of 11 July 2007 on Community statistics on migration and international protection and repealing Council Regulation (EEC) No 311/76 on the compilation of statistics on foreign workers. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32007R0862&qid=1448 964364407&from=EN

Ogawa, H., & Tsubuku, M. (2017). Impact of capital market integration on skilled-unskilled labour choice. Journal of Economic Integration, 32(1), 90–111. https://doi.org/10.11130/jei.2017.32.1.90

Orefice, G. (2010). Skilled migration and economic performances: Evidence from OECD countries. Swiss Journal of Economics and Statistic, 146, 781. https://doi.org/10.1007/BF03399337

Ozgen, C., Nijkamp, P., & Poot, J. (2009). The effect of migration on income growth and convergence: meta-analytic evidence. (IZA Discussion Paper No. 4522). Institute for the Study of Labor. http://ftp.iza.org/dp4522.pdf

Peković, D. (2017). The effects of remittances on poverty alleviation in transition countries. Journal of International Studies, 10(4), 37–46. https://doi.org/10.14254/2071-8330.2017/10-4/2

Peri, G. (2014). Do immigrants workers depress the wages of native workers? (pp. 1–42). IZA World of Labor. https://doi.org/10.15185/izawol.42

Piore, J. (1979). Birds of passage: Migrant labor and industrial societies. Cambridge University Press. https://doi.org/10.1017/CBO9780511572210

Popescu, C. R., Popescu, G. N., & Popescu, A.V. (2017). International migration, attempting to create a better world – A case study on Romania’s situation (pp. 93–104). In Proceedings of the 29th International Business Information Management Association (IBIMA), Vienna, Austria.

Preston, I. (2013). The effect of immigration on public finances. Centre for research and analysis of migration CReAM (Discussion Paper Series CDP No. 23/13). http://cream-migration.org/publ_uploads/CDP_23_13.pdf

Rappaport, J. (2005). How does labor mobility affect income convergence? Journal of Economic Dynamics & Control, 29(3), 567–581. https://doi.org/10.1016/j.jedc.2004.03.003

Rica, S., Glitz, A., & Ortega, F. (2013). Immigration in Europe: Trends, policies and empirical evidence (IZA Discussion Paper No. 7778). The Institute for the Study of Labor, Bonn, Germany.

Rivas, M. D. G., & Villarroya, I. S. (2016). Testing the convergence hypothesis for OECD countries: A reappraisal (Economics Discussion Papers, No. 2016-45). Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2016-45

Roman, M., & Voicu, C. (2010). Some socio-economic effects of labor migration on sending countries. Evidence from Romania. Theoretical and Applied Economics, 17(7(548)), 61–76. http://store.ectap.ro/articole/484.pdf

Roodman, D. (2006) How to do xtabond2: An introduction to ‘Difference’ and ‘System’ GMM in Stata (Working Paper No. 103). Center for Global Development. https://doi.org/10.2139/ssrn.982943

Sala-i-Martin, X. X. (1996). Regional cohesion: Evidence and theories of regional growth and convergence. European Economic Review, 40, 1325–1352. https://doi.org/10.1016/0014-2921(95)00029-1

Sanroma, E., Ramos, R., & Simon, H. (2015). Portability of human capital and immigrants overeducation in Spain. Population Research and Policy Review, 34(2), 223–241. https://doi.org/10.1007/s11113-014-9340-y

Sturge, G. (2018). Briefing paper Number SN06077, Dec. 2018, Migration Statistics. The House of Commons Library, UK.

United Nations. (2011). Impact of remittances on poverty in developing countries. New York and Geneva. https://unctad.org/en/docs/ditctncd20108_en.pdf

Wadsworth, J. (2015). Immigration and the UK labour market. Center for Economic Performance, London. http://cep.lse.ac.uk/pubs/download/EA019.pdf

Warman, C., Sweetman, A., & Goldmann, G. (2015). The portability of new immigrants’ human capital: language, education, and occupational skills. Canadian Public Policy [Analyse de Politique], 41(suppl. 1), 64–79. https://doi.org/10.3138/cpp.2013-055

Wilkinson, E., Kirbyshire, A., Mayhew, L., Batra, P., & Milan, A. (2016). Climate-induced migration and displacement: Closing the policy gap. Overseas Development Institute, London.