The Wage effects of Immigration and Emigration in European Countries
12:00 - 13:30
Using an improved database on the stock of immigrants and emigrants in OECD countries for the years 1990 and 2000 we construct data on net immigration and emigration from and to these countries. Using these flows and data on the labor force of these countries we can simulate, using very robust aggregate representation of national production functions the long-run wage effects of emigration and immigration on national wages of more and less educated. We direct our focus to Europe and compare the outcomes for the most relevant European countries with those of some important Commonwealth countries (US, Canada and Australia) and with some non OECD immigrant receiving and immigrant sending countries. We find that all European countries experienced a decrease in their average wages and a worsening of their wage inequality (between more and less educated) because of emigration while they experienced an increase in their average wages and an improvement of their wage inequality due to immigration. This holds true using a range of parameters for our simulations, accounting for the estimates of undocumented immigrants and correcting human capital of immigrants for the quality of their schooling. This implies that, from a wage point of view, the fears of European countries are totally misplaced: they should fear emigration and welcome immigration.