# 1 Introduction

Fear of immigration is once again manifesting itself strongly in Europe and other developed regions of the world.<sup>1</sup> Spurred by the recent crisis and giving voice to a large portion of the public, many politicians argue that immigration’s negative employment and wage e¤ects have become unbearable especially for the less skilled. Do the migration data and economic analysis bear out this pessimistic scenario? Might the populist outcry be ignoring a more important ‡ow of migrants? Does emigration, especially of highly educated workers, a¤ect the wages and employment of non-migrants? The loss of high skilled workers deprives their home countries of the scientists, entrepreneurs, educators and other professionals who drive their economies to higher levels of e¢ ciency and productivity.<sup>2</sup> Immigrants in Rome or Paris are more visible to the European public eye than the Italian or French engineers in Silicon Valley, but are they more harmful to the Italian and French labor markets? This asymmetric view leads to economic misconceptions of the economic e¤ects of migration. The goal of this paper is to assess the impact of recent global labor movements on the wages of those who do not migrate. We focus on the major European countries since they have experienced both emigration and immigration, especially when compared to the United States, Canada and Australia whose experiences have been primarily shaped by in‡ows of migrants. In addition, for comparison, we include several non-OECD countries (Argentina, South Africa and Singapore) with signi...cant migration ‡ows as well as Eastern European (Poland, Czech Republic, Hungary) and other developing countries (Mexico, Turkey) that have established important migration corridors with developed OECD countries. We use a newly available dataset to generate measures of migration ‡ows by education levels for all countries in our sample for the period 1990-2000. We analyze the wage e¤ects on the highly educated (college graduates) non-migrants and less educated (high school graduates or less) non-migrants separately to be able to assess the distributional impacts along with overall e¤ects.

In order to calculate these e¤ects at the national level, we adopt an aggregate production model which has been used in the evaluation of the impact of immigration at the national level (e.g. Borjas 2003, Manacorda et al., forthcoming) and in macroeconomic studies analyzing growth, productivity and skill premium in the US and other countries (e.g. Acemoglu and Zilibotti 2001, Caselli and Coleman 2006, Card and Lemieux 2001, Goldin and Katz 2008). We use this model to simulate the wage e¤ects of immigration and emigration, isolating this phenomenon from all other changes that happened in the same period. This simulation approach bypasses the issues of endogeneity and omitted variables encountered in the regression estimates of the wage e¤ects of immigration. The results, however, rely in important ways on the assumptions and on the parameter choice, which are therefore discussed and documented in detail. The model we use has four important components (with

> 1See, for example, the following recent articles from the Economist magazine on immigration to Spain ("Bad new Days", February 24 2010), to Italy ("Southern Misery" January 14th 2010) and to Europe in general ("No Boatloads but still troubles" August, 12th 2010).

> 2Even the academic literature has been mostly concerned with the impact of immigration on European Countries. Vis-a-vis the occasional study on the size of the "Brain drain" from Europe (such as Saint-Paul, 2008) there are scores of studies of the labor market impact of immigrants in Europe (see for instance Longhi et al 2005 for a summary).

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