Effects of migration flows on the host country labour market following the 2004 EU enlargement
Authors: Pekovic Drinka 
Published: January 2012

This paper examines the effects of migration flows on unemployment,
employment probabilities and native wages. The analysis contains the
evaluation of migration effects of labour from Central and Eastern European
countries which became European Union member states in 2004, on old member's
labour market. Particular emphasis was placed on evidence of the migration
flows impact from the new EU member states on the labour market performances
in the United Kingdom and Ireland, the countries which did not restrict the
access of new member immigrants to their labour markets. The analysis was
realized for the period of 2004 to 2008 when the migration inflow was the
largest. The empirical literature suggests that the migration effects on
unemployment and employment probabilities of natives are very small. The
young and low skilled native workers are more affected by migration flows
than other groups of workers. Also, most empirical studies show small
negative wage effects of immigration. Although the results of public
researches and econometric studies have shown the modest potential labour
migration flows from new member states and the small potential effects on
EU-15 labour market, twelve out of fifteen old member states decided to apply
transitional arrangements. The evidence presented in the report of the
European Commission pointed out positive EU labour market impact of modest
inflow of immigrants from new member states. Sectoral and skill composition
of immigrants from new member states suggests their complementary role on EU
labour market. The majority of immigrants from new member states are men,
aged between 18 and 34, mediumlevel of education. Most immigrants have been
employed in service sector, manufacturing and construction. The high
employment rate of immigrants from new member states (78%) and low
unemployment rate (6%) in the post-enlargement period have confirmed positive
migration impact on EU labour market performances. The unemployment effects
of migration have been smaller than projected. The migration flows from new
member states have resulted in negligible increase in EU-15 unemployment rate
by 0.02-0.04% and decrease in native wages by 0.08%. In the second part of
this paper the migration impact on labour market of the United Kingdom and
Ireland is examined. The selective application of transitional measures
across EU resulted in substantial diversion of migration flows toward the
United Kingdom and Ireland. In the period of 2004-2008, Ireland accepted
448.000 immigrants from new member states and in the United Kingdom 926.000
immigrants are registered in WRS, eight times more than was projected.
However, the large migration flows from new member states did not result in
substantial disturbances on the labour market. In Ireland the evidence for
the existence of displacement native workers by immigrants was found in the
hotel and restaurants sector and in manufacturing sector, but there was no
consequence in increase of native unemployment. The high economic growth rate
in Ireland and the United Kingdom caused the absence of unemployment effects
of migration and the appearance of small positive effects on native wages.
Research results show that a one percent increase the share of immigrants
from new member states in labour force causes negligible increase in native
wages by 0,0013% in Ireland and 0,246% in the United Kingdom.