How did EU Eastern enlargement affect migrant labor supply ...afae1e65-805c-4e9a-ac27... · EU enlargement and labor market access of CESEE citizens Table:Overview EU enlargements

How did EU Eastern enlargement affect migrant laborsupply in Austria?

Julia Schmieder∗ & Andrea Weber†

∗Vienna University of Economics and Business, DIW, FU & IZA†Central European University, WU, WIFO & IZA

OENB – 83rd East Jour FixeVienna, September 18, 2018

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Motivation

Impact of the EU Eastern enlargement on the Austrian labor marketalready widely discussed before 2004

Concerns about sudden labor supply shock due to substantial wagedifferentials and geographic proximity→ 7-year transition period with controlled immigration rules

In recent years, rising numbers of immigrants from Eastern Europeancountries have returned to public attention

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This paper

Development of labor supply from Central, Eastern and SoutheasternEuropean (CESEE) EU Member States in the Austrian labor market

I Labor supply defined as the stock of employed workers

Focus on period around EU entry and free labor market access toAustria

1 Change in time trends of immigrant stocks from new member countrygroups

2 Change in composition of immigrant workers

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EU enlargement and labor market access of CESEE citizens

Table: Overview EU enlargements 2004-2013

Group EU accession date Free movement of workers to Austria

CESEE-8 May 1 2004 May 1 2011

CESEE-2 January 1 2007 January 1 2014

Croatia July 1 2013 No later than July 1 2020

CESEE-8: Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland,Slovakia, Slovenia

CESEE-2: Romania, Bulgaria

Option to restrict labor market access for workers from new membercountries up to 7 years

Austrian (and German) governments opted for restriction withmaximum transition period

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EU enlargement and labor market access of CESEEcitizens (cont’d)

1 Before EU entryI Work permit requiredI Public Employment Service need to confirm that no equally qualified

Austrian worker availableI Simplified application procedures for specific groups, mainly high-skilled

or seasonal workers

2 During transition periodI Work permits still required for low-skilled workers, but now priority

given over workers from non-EU countries

3 End of transition periodI Unrestricted access to the Austrian labor market in line with the

fundamental principle of free movement of workers in the EU

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Data and Sample

Austrian Social Security Database: universe of employment inprivate sector

Individual demographic characteristics including nationality,employment spells, earnings, and employers’ characteristics

We create a quarterly panel at the individual worker levelI January 2003 - July 2017I Worker defined as individual employed in blue- or white collar job for

more than 20 days in given quarter

→ Self-employed, posted workers, and workers in the black marketnot included

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Number of employees in Austria from CESEE-8, CESEE-2countries, and Croatia, 2003-2017

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How did free labor market access change the compositionof the migrant workforce?Change in demographics & job characteristics

CESEE-8 Austrian

Female (%) -0.2 0.6[38.3] [47.0]

Age in years -1.03 0.83[39.2] [39.3]

Blue-Collar (%) 3.8 -1.7[73.8] [36.7]

Employment during 3-year time period (%) -4.7 0.5[72.3] [87.5]

Real daily earnings EUR (year 2000 prices)Mean -3.8 0.1

[56.6] [71.2]10th percentile -2.6 -0.1

[27.6] [30.9]90th percentile -7.6 0.1

[87.7] [124.7]

Notes: Change from 3 years before to after May 2011, mean before May 2011 in brackets

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Mean Age of Migrant Workers

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Mean Wage of Migrant Workers

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CESEE-8 employees across industries

∼25% of CESEE-8 migrants in services employed either by temporaryemployment agencies or in janitorial services

Sectoral concentration among CESEE-8 workers slightly increasedwith free labor market access

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Change in firm characteristics

CESEE-8 Austrian

Firm age in years -0.4 1.5[16.4] [20.9]

Firm younger than 3 years (%) 0.9 1.9[16.8] [10.1]

Number of blue- and white-collar workers at firm -111 57[583] [1,047]

Non-Austrian workers at firm (%) 6.1 1.2[45.0] [13.9]

Workers with same nationality at firm (%) 2.6 -0.7[24.2] [84.3]

Mean mthly. earnings at firm (EUR, year 2000 prices) -67.7 -2.6[1,532] [1,812]

Notes: Change from 3 years before to after May 2011; mean before May 2011 in brackets

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CESEE-8 employees across NUTS-3 regions

Notes: These maps illustrate the mean number of employees from CESEE-8 countries in the 5years before and after May, 2011, the date at which free movement of workers was established,across NUTS 3 regions. The cutoffs for the categories are the 25th (659), 50th (1,322) and 75thpercentile (2,278) of the mean number of employees across NUTS 3 regions and time periods.

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Conclusions

From 2003 to 2016, the stock of employed CESEE workers grew by afactor of 4

I Transition period was effective in restricting labor market accessI Growth accelerated persistently after the complete labor market access

With free movement of labor shift in the composition of migrantworkers toward lower-qualified and younger groups

Large share of migrant workers employed in seasonal industries and inborder regions closest to their home

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