Labour market performance and migration flows - European ...

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European CommissionOccasional Paper 60, Volume Iinactivity. But in any case migration brings about a loss of valuable investments oneducation that needs to be addressed. In any case, there is strong evidence that SKILLED MIGRATION (i.e. graduatemigrants) from AMCs is directed mainly towards the Gulf and the US, rather thantowards the EUWages seem to play the most important role in this respect, but migration policies also have animpact. This has important implications for the current EU drive to create instruments (such asthe recently approved Blue Card) to attract a higher number of skilled immigrants to EUlabour markets. As for the EFFECTS OF OUTWARD MIGRATION ON LABOUR MARKETSaccording to the literature, they can be summarized in the following tableSynthetic table of the effects of outward migration on labour marketsEffects on labour marketsSupply sideDemand sideFactor EndowmentsBehaviourConsumptionpatternsInvestments,entrepreneurialactivitiesMigration stagesProspect tomigrateActual migration(permanent;temporary)RemittancesReturn migrationLabour supply (L) - - - +Skills supply (H)(brain drain/gain)+ - + +Capital supply (K) = = + +Education (H)(skills acquisition)+ = + +Labourparticipation (L)- = - +Wages(reservation wages)+ + + +Labour demand - + + +Labour demand(K)- - + +Structure Informal employment = = + =L = Labour supply; K = Capital; H = Human CapitalHowever, empirical evidence in AMCs shows that, apart from easing the demographicpressure on the labour markets of AMCs, migration exerts little or no effect on the femaleparticipation rates, and that brain drain does not represent a serious threat for the developmentof most AMCs. Along the same lines, the demand stimulus derived from remittances has alimited job-creation effect. In contrast, return migration can have a more relevant long-lastingeffect on employment opportunities.18
Chapter IFinal Report In AMCs, REMITTANCES do not seem to affect labour markets to a large extentNeither National Background Papers nor the literature provide evidence of high remittancelevels in AMCs affecting the labour participation rate of women (which is determined ratherby cultural factors) or average wages (which are very inelastic due to the abundance of labour,the prevalence of informal employment and the high levels of unemployment). However,remittances or the prospect of migration do seem to have an impact on reservation wages, thusincreasing the “equilibrium” level of unemployment, in particular for graduates. This seems tobe particularly the case in Lebanon and Jordan and to a lesser extent in Morocco. RETURN MIGRATION, in contrast, has very positive effects on labour markets ofcountries of origin, but so far its size is marginal in most AMCsReturn migrants show a higher propensity for entrepreneurial activities, in part due to skillsacquisition and in part as a consequence of capital accumulation, and earn higher wages thannon-migrants (implying higher levels of productivity). However, so far return migration has beenrelatively marginal in size in all AMCs, if one puts aside the case of Egypt and of forced returnmigration to Jordan, Egypt, Lebanon and Tunisia, in particular after 1991 due to the first theGulf war, which put significant pressures on these countries’ labour markets. Indeed, so far thepropensity to return depends to a large extent on destination and not origin countries. In thiscontext, circular migration and facilitating the voluntary return of migrants becomes a win-winstrategy for the migration policies of both destination countries and countries of origin. MIGRATION ALONE WILL NOT SOLVE THE LABOUR MARKET CHALLENGESof AMCsThe magnitude of the employment challenge in AMCs in the coming 10 to 15 years is suchthat there is no realistic scenario which migration could ‘solve’. However, many of the policyactions and institutional reforms required to become more competitive in the global laboursupply market—enhanced education and vocational training systems, increased labourparticipation for women—correspond with those needed to foster private sector job creationand labour productivity growth at home. But the DEMOGRAPHIC AND SKILLS PROFILE OF THE EU AND AMCs OFFEROPPORTUNITIES FOR WIN-WIN MATCHING STRATEGIES between EU labourdemand and AMC labour supplyIn the coming two decades, AMCs will provide a pool of increasingly educated young workersin which the EU labour markets could invest its increasing demand for medium- and high-skilledmigrant workers. This matching would be mutually beneficial and partially dampen the mainfactor for social instability in the region, and hence have positive externalities for Europe bypreventing spill-over into neighbouring European countries. To this extent, investment in theskill development of AMC labour forces has the characteristics of a public good for Europe.However, this synergy is contingent upon an effective and immediate skills upgrading oflabour forces in the AMCs (this should become a priority for EU-AMC economic cooperation)and the setting up of a friendly climate for legal migration in the EU, effectively attractingskilled migrants. The current instruments of EU migration policy, including the recentlyapproved Blue Card, do not seem to provide for this. This notwithstanding the new Euro-Mediterranean regional dynamics put in place through the first Euro-MediterraneanMinisterial Conferences on migration and employment could eventually give rise to acomprehensive region-wide strategy on labour migration – provided that the appropriatepolicy tools and effective implementation plans are adopted.On the basis of these findings, the following proposals for action and policy recommendations submittedfor consideration in Section 7 are summarized:19
Page 5 and 6: STUDYLABOUR MARKETS PERFORMANCE AND
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