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11 - East–West trade and migration: the Austro-German case
- from PART THREE - HISTORICAL AND CONTEMPORARY EVIDENCE
- Edited by Riccardo C. Faini, Università degli Studi di Brescia, Italy, Jaime de Melo, Université de Genève, Klaus Zimmermann, Ludwig-Maximilians-Universität Munchen
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- Book:
- Migration
- Published online:
- 10 May 2010
- Print publication:
- 23 September 1999, pp 296-327
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- Chapter
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Summary
Introduction
The demise of the political system in Central and Eastern Europe (CEE) and the Former Soviet Union (FSU) has created a new challenge for the EU – economic integration and enlargement. Eastern enlargement concerns the association of 10 CEE countries (CEECs), the Visegrád-4 (Czech Republic, Hungary, Slovak Republic and Poland), the Balkan-3 (Bulgaria, Rumania and Slovenia) and the Baltic-3 (Estonia, Latvia and Lithuania). The integration issue, however, also covers the other states from the FSU. While enlargement is seen both as a political necessity and a historical opportunity, the economic consequences are not yet well understood. A rising number of EU Member States seem more reluctant to take in new members, often because they fear that such a move will be expensive. One major concern stems from the potential labour market effects of integration and enlargement. Opening markets will encourage factor flows and trade, and hence very likely cause adjustments in wages and employment opportunities in EU economies. Given the ever-rising unemployment rates, and the relative decline of unskilled wages in Western Europe, the Eastern enlargement is seen as a threat to native labour markets. As a result of geography and historical ties, Austria and Germany have already received disproportionately more immigrants and stronger increases of trade flows than other countries. It has to be expected that this trend will continue in any process of economic integration in the East. Hence, the objective of this chapter is to assess present and potential future developments against the background of the Austro-German case.
Two largely separated strands of literature have investigated the effects of trade and migration on native labour markets.
Discussion
- from PART TWO - QUANTIFYING THE LINKS BETWEEN TRADE AND MIGRATION
- Edited by Riccardo C. Faini, Università degli Studi di Brescia, Italy, Jaime de Melo, Université de Genève, Klaus Zimmermann, Ludwig-Maximilians-Universität Munchen
-
- Book:
- Migration
- Published online:
- 10 May 2010
- Print publication:
- 23 September 1999, pp 185-189
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- Chapter
- Export citation
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Summary
Chapter 7 is very interesting, and a contribution I certainly enjoyed reading. Looking at the topic, I even wondered why nobody else had tackled this problem earlier. Tobias Müller starts from the observation that the assimilation process of immigrants is different in, say, the USA from Western Europe. The famous Chiswick (1978) study suggests that foreign-born workers catch up in earnings with natives in 13 years. In the typical ‘guest-worker’ country, Germany, this does not seem to be the case at all: foreigners start at lower levels and have lower rewards to job experience than Germans (Licht and Steiner, 1994).
This differential treatment of immigrants gives rise to the suspicion of segmented labour markets for natives and foreigners. Therefore, the question arises: if natives can discriminate against foreigners, does this change the welfare assessment of immigration? One way towards this end is to look at migration policies having the potential of a Pareto-improvement – provided some sort of redistributive scheme is applied. Chapter 7 uses a different framework: welfare of natives is expressed by an explicit social welfare function of the Atkinson type, so that inequality-aversion of the social planner can be explicitly considered. The profitability of a specific migration scenario can thus be judged with respect to the inequality-aversion of the society. It turns out that for low levels of inequality-aversion immigration is beneficial for the host country, even more so if the immigrants have no access to the primary sector of the economy. The more important inequality concerns get, the less favourable immigration will be.