Modeling migration flows: Modeling migration flows: explanations and policy explanations and policy implications (the case of implications (the case of Luxembourg) Luxembourg) [email protected]CMTEA 2008 The future of Europe in a world of uncertainties Romania, Iaşi, September 25-27, 2008
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Modeling migration flows: explanations and policy implications (the case of Luxembourg)
CMTEA 2008 The future of Europe in a world of uncertainties Romania, Iaşi, September 25-27, 2008. Modeling migration flows: explanations and policy implications (the case of Luxembourg). [email protected]. Luxembourg in Europe. Paris. The context (1). Migration - PowerPoint PPT Presentation
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Modeling migration flows: Modeling migration flows: explanations and policy implications explanations and policy implications
– House prices (HP):• neighbouring regions (from B, F, D), different sources
Estimation results (1)
• Order of integration– all variables (ratios) entering the equations are I(1)
• Estimation of level equations (1st step of Engle-Granger two step procedure)– OLS, stationarity of residuals cointegration?– Results fail to confirm cointegrating relationship
(McKinnon critical values) but residuals “optically” stationary…
-0. 25
-0. 20
-0. 15
-0. 10
-0. 05
0. 00
0. 05
0. 10
0. 15
RES_MI GRI N_OLS
-0.25
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
RES_MIGRIN_OLS2
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
RES_MIGROUT _OLS
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
RES_FRIN_OLS
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
RES_FRIN_OLS2
Estimation results (2)• Error correction models
– Dynamic ECM only works for CBW: cointegration clearly confirmed by t-test on error-correction parameter (Banerjee 1998)
3 Revenues Lux. / Rev. abroad4 Unemployment Lux. / Ue abroad5 House prices Lux. / H. p. abroad
7 n.a. = not applicable
Long run
2 Coefs on indep. variables are elasticities; *=10% significance level; **=5%; ***=1%; No * ==> not significant (n.s.) at the 10% level (short run) except for the first two equations where the long-run part is calibrated.
6 Contrary to the other equations, the cross-border equation is estimated in one step (dynamic ECM), hence significance levels on variables in the long run part (no * ==> not significant)
1 All migration variables are expressed as migration rates , i.e. migration flow divided by total population; the stock of cross.border workers is divided by total employment
bordering regions, lower net wages and house prices
Simulations (5)
• 10% increase in labour demand (in Lux.)– increases resident employment and commuters (CBW)
• impact on CBW stronger (except for the two first years in partial model) for a transition period, but, in the LR, convergence towards increase of 10%
– part in newly created jobs: 2/3 commuters; 1/3 resident– resident unemployment only decreases initially
• decrease in resident unemployment attracts new foreign workers unsustainable
– Full model: multiplier effects impact on total employment > 10% decrease in resident UE a little stronger
Complete modelPartial model
-10
-5
0
5
10
15
20
25
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
In-migration
CBW
Out-migration
-10
-5
0
5
10
15
20
25
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
In-migration
CBW
Out-migration
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
2007
2010
2013
2016
2019
2022
2025
2028
Unemployment rate (%points)
Migration rate (% oftot. pop.)
Activity rate
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
2007
2010
2013
2016
2019
2022
2025
2028
Unemployment rate (%points)
Migration rate (% oftot. pop.)
Activity rate
Complete modelPartial model
0
5
10
15
20
25
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Cross-borderemployment (CBW)
Total employment
Resident employment
0
5
10
15
20
25
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Cross-borderemployment (CBW)
Total employment
Resident employment
20
30
40
50
60
70
80
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
% of new jobs takenby res. employment
% of new jobs takenby CBW
20
30
40
50
60
70
80
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
% of new jobs takenby res. employment
% of new jobs takenby CBW
Complete model
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2007
2010
2015
2020
2030
GDP (vol.)
National demand (vol.)
Exports (vol.)
GDP deflator
-2
0
2
4
6
8
10
12
14
16
18
2007
2010
2015
2020
2030
Oth
er e
xpo
rts
Exports of goods (vol.)
Exports of services(vol.)
Consumption of non-residents (vol.)
Simulations (6)
• 1 ppt decrease in domestic unemployment (UE)– the initial decrease in domestic UE increases foreign
labour supply…– …which pushes up UE in L
• there is a 1:1 substitution between resident workers and CBW
– as a result, the decrease in UE is almost completely reversed
• only in the complete model is there a sligthly bigger decrease in resident UE, because migrations increase less…
• …due to lower net wages (overall negative demand shock)
Complete modelPartial model
-0.75
-0.50
-0.25
0.00
0.25
0.5020
07
2010
2013
2016
2019
2022
2025
2028
Unemployment rate (%points)
Activity rate (% of tot.pop.)
-0.75
-0.50
-0.25
0.00
0.25
0.50
2007
2010
2013
2016
2019
2022
2025
2028
Unemployment rate (%points)
Activity rate (% of tot.pop.)
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
In-migration
CBW
Out-migration
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
In-migration
CBW
Out-migration
Complete modelPartial model
§
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Cross-borderemployment (CBW)
Resident employment
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Cross-borderemployment (CBW)
Total employment
Resident employment
-1.0
-0.5
0.0
0.5
1.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
GDP (vol.)
National demand (vol.)
GDP deflator
Simulations (7)
• Modifiy (foreign, exogenous) variables that act on foreign labour supply:– unemployment – earnings– house prices
• Modifiy these variables in a way to emphasize stylized facts:– higher UE, lower earnings and lower house prices in the
neighbouring regions
Simulations (8)
• Results:– in all cases, increased foreign labour supply depresses
resident employment and increases res. UE– the initial negative impact on GDP reverses after some
periods, due to the favorable evolution of price competitiveness (fall in domestic prices)
– in case of a fall in foreign house prices, the negative demand shock lasts longer (although the amplitude of the results of the shocks on the national variables can generally not be compared)
Impact on in-migration
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE,partial
Increase in foreign UE,complete
Decrease in foreign netw ages, partial
Decrease in foreign netw ages, complete
Decrease in foreign houseprices, partial
Decrease in foreign houseprices, complete
Impact on cross-border employment
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE,partial
Increase in foreign UE,complete
Decrease in foreign netw ages, partial
Decrease in foreign netw ages, complete
Decrease in foreign houseprices, partial
Decrease in foreign houseprices, complete
Impact on resident employment
-9.0
-8.0
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE,partial
Increase in foreign UE,complete
Decrease in foreign netw ages, partial
Decrease in foreign netw ages, complete
Decrease in foreign houseprices, partial
Decrease in foreign houseprices, complete
Impact on resident UE
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE,partial
Increase in foreign UE,complete
Decrease in foreign netw ages, partial
Decrease in foreign netw ages, complete
Decrease in foreign houseprices, partial
Decrease in foreign houseprices, complete
Impact on GDP (vol.), complete model
-0.5
0.0
0.5
1.0
1.5
2.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE (+1% point)
Decrease in foreign netw ages (-5%)
Decrease in foreign houseprices (-10%)
Impact on total employment, complete model
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE (+1% point)
Decrease in foreign netw ages (-5%)
Decrease in foreign houseprices (-10%)
Impact on GPD deflator, complete model
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE (+1% point)
Decrease in foreign netw ages (-5%)
Decrease in foreign houseprices (-10%)
Impact on national demand, complete model
-1.5
-1.0
-0.5
0.0
0.5
1.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Increase in foreign UE (+1% point)
Decrease in foreign netw ages (-5%)
Decrease in foreign houseprices (-10%)
Conclusions (1)
• Econometric evidence confirms the importance of earnings, unemployment and house prices for explaining cross-border worker’s (commuters) movements
• Estimations of migration equations are less robust (econometrically), but the obtained coefficients are sensible
Conclusions (2)
• A positive demand shock on the national economy, having an impact on employment and/or unemployment, increases foreign labour supply, possibly as much as to reverse, partially or totally, the positive initial impact of the favourable shock
• Increased foreign labour supply, due to unfavourable exogenous causes (negative shocks on foreign economies), is generally positive for the domestic economy, after some lags, with the exception of unemployment, that increases
Thank you very much for your Thank you very much for your attentionattention