Cross-Border Labor Flows in New European Union Member States

• Author: Rudolfs Bems
• Pages: 6-7

Page 6

Following European Union (EU) accession, the new member states-the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic, and Slovenia, and later Bulgaria and Romania-experienced sizable cross-border labor flows. During 2004-07, some 200,000 to 250,000 workers left the eight initial new member states annually, intensifying the trend that had occurred since the outset of the transition in the early 1990s. By comparison, cumulative net migration from new member states between 1989 and 2000 is estimated at 650,000. So far, cumulative net outflows since 2004 represent 1.5 percent of the source countries' total population, which is broadly in line with the predicted outflows (Bertola and others, 2002).

Cross-border flows show growing heterogeneity within new member states, with labor flowing in both inbound and outbound directions. While the majority of new member states witnessed sizable outflows to higher-income countries, Slovenia, the Czech Republic, and Hungary simultaneously benefited from large inflows from their lower-income neighbors and on balance have been net labor recipients. In terms of destinations, it is estimated that between 2004 and 2007, the number of persons from the 10 new member states living in the United Kingdom increased by 140,000 annually, making the United Kingdom by far the most significant recipient country (Pollard, Lattore, and Sriskandarajah, 2008; Iakova, 2007). Although reliable data on flow composition are scarce, the limited evidence suggests that young people are highly represented in both outflow and inflow statistics. Comprehensive data on skill composition of labor flows are not available and partial evidence from selected countries offers conflicting findings.

Cross-border flows have been driven to a large extent by income differences between new member states and recipient countries. Brunner (forthcoming) shows that net migration rates are strongly correlated with income differentials.

The author's estimated relationship between income and migration, based on historical data for European countries, can explain a significant share of the size and cross-country variation in net migration in new member states. The timing of the intensification of the cross-border flows can be attributed to the elimination of labor movement restrictions in recipient countries after the EU expansion, as well as to a major reduction in other migration related costs, such as the...