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International Labour Migration, Economic Growth and Labour Markets: The Current State of Affairs

The second half of the 20th century has seen major shifts in the nature and the extent of worldwide migration. While the classical immigration countries such as the United States have remained major receiving areas, their sources of immigration have changed substantially, away from the traditional European sources to Latin America and Asia. At the same time, many societies in Europe have been transformed by their intense and multi-faceted immigration experience in the sixty years after World War II. Finally the enlargement of the EU – in combination with increasing migration activity worldwide – has placed migration high on the European agenda. This does not only apply to the EU 15 countries. In addition, Central European countries face increasing problems with their new role as transit countries for people heading towards Western Europe. Also the characteristics of the migration flows have become more diverse. Temporary migration of workers, especially highly skilled workers, is increasingly growing in importance, while traditional migration networks appear to be losing their significance. More restrictive migration policies towards asylum seekers, refugees and unskilled workers has increased the volume of illegal immigration and human trafficking. The overarching theme of the current migration debate is the nature of the economic effects for the receiving economies. However, neither the causes and consequences of migration are well understood, nor is it obvious how to predict its development into the future. Most importantly, immigration has become a more variegated phenomenon, making a shift of research effort, particularly to the receiving region Europe, indispensable. Within Europe, the free movement agreement of the European Union in principle smoothes the way for labour migration across national borders. Yet despite the demise of socialism in Eastern Europe, mobility within the European Union still seems rather low or even negligible, thereby moving migration from outside Europe into the centre of the discussion. The current situation of the European labour markets is characterised by rather high average unemployment. However, there is typically a concurrent shortage of highly skilled labour. Thus, European economists argue increasingly for an immigration policy directed at actively recruiting highly qualified workers from abroad. Among migration experts there is even a growing perception that the industrialised countries have been involved for a long time in a constant competition for highly skilled workers (for a recent overview on highly skilled migration see Rothgang and Schmidt, 2003). In addition, Europe’s societies are ageing, placing their pay-as-you-go social security systems under considerable demographic pressure. It is increasingly realised by the public that a regulation of future immigration that is tailored to attract young and economically successful migrants can alleviate some of the demographic burden associated with an ageing population (Bonin et al., 2000). In this paper, we outline a systematic classification of economic migration research according to its major conceptual and applied questions. The state of theoretical and empirical research in the literature is briefly reviewed and presented within a clear conceptual framework. Although there is no unique, all-encompassing theoretical model linking together all aspects of the different topics of economic migration research, the main issues can be conceptualised within three broad lines of research. The first research area is concerned with the factors which determine the decision to migrate, and consequently with the magnitude and the composition of migration flows. The analysis of this theme is an important prerequisite for the understanding both of migrant performance and the impact of immigration, which are the other two areas of economic migration research. Research on the economic performance of immigrants in the destination country examines how migrants’ wages and employment outcomes – or their dependence on the welfare system – compare to those of comparable natives, and how this comparison evolves as the migrants’ duration of residence increases. A closely related aspect concerns the perception of, and the attitudes towards, immigrants by the native population in the receiving country. A third line of research analyses the economic impact of immigration on the indigenous population and the macroeconomic performance of the destination country. Perhaps most importantly, we examine whether immigration reduces the wages or employment prospects of natives or earlier immigrants, and by what mechanisms. A mirror image of these research questions is also presented which studies concerns over the possible brain drain caused by emigration from sending countries. These three areas are interrelated with one another and have a potentially significant influence on immigration policy. Migrants’ skills are perhaps the central theme of all economic migration research. Since immigration policy might well influence the composition of immigration flows – and since formal and informal human capital endowments mainly determine the economic performance of immigrants in their destination country, as well as their impact on it – immigration policy can have a decisive role on the consequences of immigration. Throughout the paper, we will concentrate our discussion on the UNECE region (i.e. all the countries of Europe, plus Turkey and Israel, Canada and the United States, and all countries of the former Soviet Union including the Central Asian Republics). In the first section, we provide a general typology of migration and migrants, as well as a critical discussion on the reliability of existing statistical information on international migration. Migration flows in the region before and after 1990, together with the policy responses of the countries towards immigration, are described in the following section. Particular attention is paid to the background of an ageing society and the demand for highly skilled workers. The third section offers a survey of the economic literature with regard to the performance of immigrants in the economy and their integration into the society of their receiving countries. The fourth section discusses the economic impact of migration. In the final section we discuss expectations with regard to future migration flows and the policy options of different immigration countries to deal with these flows.

Bauer, T., J. Haisken-DeNew and C. Schmidt (2005), International Labour Migration, Economic Growth and Labour Markets: The Current State of Affairs. In Miroslav Macura, Alphonse L. MacDonald and Werner Haug (Hrsg.), The New Demographic Regime - Population Challenges and Policy Responses. New York/Genf: United Nations, 111-136.

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