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

Author

Listed:
  • Kahanec, Martin

    (Central European University)

  • Pytlikova, Mariola

    (CERGE-EI)

  • Zimmermann, Klaus F.

    (University of Bonn)

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.

Suggested Citation

  • Kahanec, Martin & Pytlikova, Mariola & Zimmermann, Klaus F., 2014. "The Free Movement of Workers in an Enlarged European Union: Institutional Underpinnings of Economic Adjustment," IZA Discussion Papers 8456, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8456
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    Citations

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    Cited by:

    1. Mihails Hazans, 2016. "Migration Experience of the Baltic Countries in the Context of Economic Crisis," Springer Books, in: Martin Kahanec & Klaus F. Zimmermann (ed.), Labor Migration, EU Enlargement, and the Great Recession, pages 297-344, Springer.
    2. Giesing, Yvonne & Laurentsyeva, Nadzeya, 2016. "Emigration and Firm Productivity: Evidence from the Sequential Opening of EU Labour Markets," VfS Annual Conference 2016 (Augsburg): Demographic Change 145850, Verein für Socialpolitik / German Economic Association.
    3. Yvonne Giesing & Nadzeya Laurentsyeva, 2017. "Firms Left Behind: Emigration and Firm Productivity," CESifo Working Paper Series 6815, CESifo.
    4. Ritzen, Jo & Kahanec, Martin, 2017. "A Sustainable Immigration Policy for the EU," IZA Policy Papers 126, Institute of Labor Economics (IZA).
    5. Ritzen, Jo & Kahanec, Martin & Haas, Jasmina, 2017. "EU Mobility," IZA Policy Papers 125, Institute of Labor Economics (IZA).
    6. Martin Kahanec & Lucia Mýtna Kureková, 2016. "Did Post-enlargement Labor Mobility Help the EU to Adjust During the Great Recession? The Case of Slovakia," Springer Books, in: Martin Kahanec & Klaus F. Zimmermann (ed.), Labor Migration, EU Enlargement, and the Great Recession, pages 189-218, Springer.
    7. Martin Guzi & Martin Kahanec & Magdalena M. Ulceluse, 2021. "Europe's migration experience and its effects on economic inequality," MUNI ECON Working Papers 2021-05, Masaryk University, revised Feb 2023.
    8. Kahanec, Martin & Zimmermann, Klaus F., 2016. "Post-Enlargement Migration and the Great Recession in the E(M)U: Lessons and policy implications," MERIT Working Papers 2016-066, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Giesing, Yvonne & Schikora, Felicitas, 2023. "Emigrants’ missing votes," European Journal of Political Economy, Elsevier, vol. 78(C).
    10. Martin Guzi & Štěpán Mikula, 2022. "Reforms that keep you at home: The effects of economic transition on migration," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(2), pages 289-310, April.
    11. Artjoms Ivlevs & Michail Veliziotis, 2018. "Local-level immigration and life satisfaction: The EU enlargement experience in England and Wales," Environment and Planning A, , vol. 50(1), pages 175-193, February.
    12. Sorin Manole & Laura Panoiu & Adriana Paunescu, 2017. "Impact of Migration upon a Receiving Country’s Economic Development," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 670-670, August.
    13. Marjan Petreski & Despina Tumanoska, 2023. "Labor mobility preconditions for the regional economic integration: Pros and cons from Macedonian perspective," Finance Think Policy Studies 2023-09/47, Finance Think - Economic Research and Policy Institute.
    14. Franc Sanja & Časni Anita Čeh & Barišić Antea, 2019. "Determinants of Migration Following the EU Enlargement: A Panel Data Analysis," South East European Journal of Economics and Business, Sciendo, vol. 14(2), pages 13-22, December.

    More about this item

    Keywords

    EU eastern enlargement; free movement of workers; transitional arrangements; determinants of migration; Great Recession; natural experiment; difference-in-differences; migration policy;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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