Working Paper: NBER ID: w23048
Authors: John Kennan
Abstract: In 2004, the European Union admitted 10 new countries, and wages in these countries were generally well below the levels in the existing member countries. Citizens of these newly-admitted countries were subsequently free to take jobs anywhere in the EU, and many did so. In 2015, a large number of refugees from Syria and other broken countries sought to migrate to EU countries (along very dangerous routes), and these refugees were met with fierce resistance, at least in some places. This paper seeks to understand the labor market implications of allowing free migration across borders, with particular reference to the EU. The aim is to quantify the migration flows associated with EU enlargement, and to analyze the extent to which these flows affected equilibrium wages. The main conclusion is that the real wage effects are small, and the gains from open borders are large.
Keywords: migration; labor market; EU enlargement; wages; open borders
JEL Codes: E25; F22; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Free migration across borders (F22) | small real wage effects (J31) |
| Migration increases effective supply of labor (J61) | small real wage effects (J31) |
| Increase in effective labor supply (J29) | changes in capital-labor ratios (J24) |
| Changes in capital-labor ratios (D24) | small real wage effects (J31) |