The Economic Challenges

of Migration in Europe

By Jacob Funk Kirkegaard

1

“If we are not able to find humanitarian and efficient solutions,

then others will find solutions which are inhumane, nationalistic and for sure not European.”

—Donald Tusk, president of the European Council, October 15, 2015

Introduction

The sudden surge of migrants into Europe, especially Greece and Italy, in late 2015 pushed the continent

into a state of political and economic emergency. To date, no effective coordinated policy response has

been agreed to, and the recent EU agreement with Turkey will not change the situation, even as the

number of migrants reaching European shores is expected to rise again with the coming of spring. This

paper analyzes how Europe has in recent decades successfully increased its inward migration levels to

counter accelerating demographic decline, and especially how the policy of free movement of workers

has been a remarkably successful channel for employment-based migration. Yet European countries

today face an unprecedented challenge. Not only must they cope with the immediate consequences of

the arrival of record numbers of asylum seekers, but governments also must decide how to treat asylum

seekers whose petitions are denied. For those who are approved to stay, the next question is whether

Europe’s economies will generate enough jobs for them.

European policymakers dealing with these issues encounter several of the same immigration policy

dilemmas that the United States has faced for decades: how to secure the external border, deal with a

large population of resident illegal migrants, and successfully employ migrants who come from very

different backgrounds than native workers.

The paper is organized in three sections: Section I describes Europe’s longer-term transition to a major

migration destination and the success of the free movement of workers. Section II explains the

challenges associated with the recent increase in migrant arrivals and how they will push European

policymakers to address many of the same immigration issues that the United States has seen. And

Section III presents a series of policy reform proposals aimed—generally through greater coordination

among EU member states—at enabling Europe to better cope with its new set of migration-related

challenges.

I Europe as a 21st Century Migration Destination

The European working-age population began an inexorable decline in 2010i, reinforcing the economic

importance of migration as a source of future economic growth. European nation-states’ tradition of

welcoming large numbers of immigrants is not as strong as that of the “Anglo-Saxon” settlement

countries: the United States, Canada, Australia and New Zealand. Yet as the economic imperative of

immigration rises in Europe, it is important to recognize that net migration has, for decades, been the

principal driver of regional population changes.

There are essentially two channelsii though which a country’s population can develop over time:

2

Natural change in a population: the difference between the number of live births and the number of

deaths during the year. A positive natural change, or natural increase, occurs when live births

outnumber deaths. A negative natural change, also known as natural decrease, occurs when deaths

outnumber live births.

Net migration: the total number of immigrant nationals and foreigners minus the total number of

emigrant foreigners and nationals. The effects of regular statistical data updates and revisions are

typically added to this category, and for population data they can be sizable.

In advanced economies, government policies can affect the natural rate of change in a population to

some extent. One way is through improved health care. Reductions in mortality rates as a result of this,

however, have in recent decades tended to come overwhelmingly toward the end of people’s lifespans,iii

merely postponing long-term declines in countries’ population growth. On the other hand, government

policies promoting flexible job markets for parents or subsidized childcare, as well as social acceptance

of out-of-wedlock childbirths, have had some positive effects on total fertility levels and the long-term

natural growth rate of populations.iv

By far the most effective way for governments to reverse demographic decline is to make it easier for

immigrants to enter and settle in their countries. Unlike other demographically challenged economies

like Japan or South Korea, European governments began making such legal accommodations years ago.

Figure 1 illustrates how net migration to the “EU-28” (all the current member states) eclipsed natural

change as the principal driver of population change more than a generation ago. In the 21st century,

aggregate EU-28 net migration levels have been roughly comparable to those of the United States while

significantly exceeding those of Japan.v In terms of its strategy to address long-term population aging,

Europe has moved closer to the American migration-based model.

3

At the same time, however, the aggregate trend in Europe masks dramatic differences in population

change drivers among individual EU countries (see appendix tables 1-5 for depictions of Germany,

France, UK, Italy and Spain). Unified Germanyvi has perhaps the most striking population trend, as its

rate of natural change has been persistently negative since 1972—far longer than in any other advanced

economy.vii During that time period, however, the country has sought to address demographic decline

and bolster its economy via periodic waves of immigration. Therefore, Germany’s recent policy of

welcoming refugees is not surprising when considered in this historical context.

The French population, meanwhile, has been characterized (compared with Germany and others in the

so-called “EU-15,” the countries that were members as of 1995) by a remarkable stability of both natural

change and low levels of net migration, resulting in stable population growth rate of about 0.5 percent

annually over the past 40 years. The United Kingdom in the 2000s witnessed a resurgence of both

natural population change and net migration; the latter now exceeds U.S. levels, while the U.K.’s total

population increase in the past decade has been at levels last seen in the 1960s. Italy’s and Spain’s

population dynamics in many ways look similar to Germany’s, as net migration inflows now dwarf

natural population change. However, Italian and Spanish natural rates of population change have not

been as persistently negative as in Germany.viii The two countries have witnessed one recent large wave

of net migration inflows, while Germany has seen recurring smaller ones.ix

In recent decades, European countries managed to significantly increase net migration by admitting

many more workers through permanent-type employment-based migration.x Figure 2 breaks down the

4

earliest available comparable data for (pre-crisis) 2008 and the latest available data from 2013 into the

four main entry categories of “family-based,”xi “employment-based,” “humanitarian”xii and “other.”xiii

The “employment-based” category is further sub-divided into “permit-based employment” migration,

where the migrant is granted entry after acquiring a personal work authorization, and “free movement”

employment migration, where the would-be worker faces very few restrictions on movement or

duration of stay in the destination country. ”Free movement” migration includes the free movement of

workers within the EU-28, as well as free bilateral skilled worker flows under a mutual recognition legal

arrangement with Australia and New Zealand in the late 1990s.xiv

Figure 2 points out several important migration trends. First, both immediately before and after the

2008–2009 global financial crisis, most EU-15 member states had inward permanent-type migration

intensity (measured as share of the existing population) exceeding that of the United States and on par

with other traditional Anglo-Saxon settlement countries. Only in the euro area periphery are there

noticeable declines from 2008 to 2013, highlighting the generally high sensitivity of inward employment-

based migration to a volatile economic cycle in the destination country. Second, EU-15 inward migration

is generally less dependent on family-based migration; only Portugal, France and Sweden have shares

approaching 40 percent. In comparison, all traditional settlement countries (and particularly the United

States, at over 70 percent) are dominated by family-based inward migration. Third, with the noticeable

exception of Sweden, inward migration to the EU-15 before and after the financial crisis was largely

employment-based (this is especially true of the non-EU Schengen members). Fourth, in the case of the

United Kingdom, it is interesting to note the contrast between public discourse among those urging the

5

U.K. to opt for a “Brexit” and the actual data on the country’s free movement inflow levels. As a share of

the existing population, both before and after the crisis, they are lower than in most of the other EU-15

member states.

Overall, Figure 2 demonstrates that the policy of free movement of workers inside the EU has led to

employment-based migration dominating inward flows into the EU-15. This is a crucial positive factor

when considering the likely longer-term economic effects of the recent decades’ rise in immigration to

Europe. Overall job prospects for employment-based migrants in the destination country (often this is a

legal requirement) will be high—indeed, in countries such as the United States their prospects are

higher than for the native population, as migrants bring needed skills and are highly motivated to find

work. Figure 3 breaks down the latest available employment rates (2014) by location of birthxv for the

EU-15 and, for comparison, the United States.

Figure 3 highlights the overall success of the free movement of workers inside the EU. Overall,

employment rates among immigrants born in other EU countries are higher than those of the native

population in both the EU-15 and EU-28. The same is true in most individual member states, except

Sweden, the Netherlands and Belgium.xvi It is again noteworthy how the U.K.— where the employment

rate of migrants from the EU is 5.5 percent higher than among British natives—has seen the most

45

50

55

60

65

70

75

80

EU28

EU15

EA1

9

Swed

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Au

stria

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France

Po

rtugal

Be

lgium

Ireland

Spain

Italy

Greece

Un

ited

States

Pec

en

t o

f To

tal

Figure 3 Employment Rates, By Country of Birth, Ages 15-64, 2014

Total Natives Total Foreign-Born (FB) FB Other EU28 FB Non-EU28

EU Aggregates EU15 Best Performers EU15 Laggards

Data for Germany incomplete and refers to total foreign-born only. Source: Eurostat, OECD

6

significant positive economic effects of the free movement of workers in Europe. Figure 3 makes it clear

that fighting to maintain the free movement of workers in Europe is an economically vital cause.

At the same time, Figure 3 illustrates the core of both the political and economic problems surrounding

recent decades of inward migration in Europe. In virtually all member states, the stock of migrants born

outside the EU—of which only a small fraction arrived through employment-based migration—are

significantly less likely to have a job than the native population. This is also true in many of the EU-15

countries with high native and overall employment rates, implying that even moderately successful

labor market models in Europe have failed in this crucial task.

The longer-term political implications of this situation are outside the immediate scope of this paper.

Many EU-15 member states face rising fiscal constraints due to aging populations, combined with

already chronically low employment rates overall. In this context, the longer-term employment

challenges associated with the recent record inflow of non-EU refugees and migrants must be urgently

addressed. Employment rate differentials between native and non-EU migrant workers of the

magnitude witnessed in Scandinavia, the Netherlands, Belgium or France are troubling from an

economic sustainability standpoint. They are incompatible with the long-term financial viability of both

the comprehensive tax-financed welfare states and contribution-based social insurance models in many

EU-15 member states.

Unless Europe’s existing social models are reformed to improve the employability of migrants coming

from outside the EU-28, they will not stand the test of time in the 21st century.

II The Economic Challenges from Europe’s Current Migration Emergency

As noted earlier, the sudden, dramatic rise in the number of refugees coming to Europe in the second

half of 2015 has only added to the migrant inflows that have been accelerating for many years. An

additional 1 million refugees in 2015 account for approximately 0.2 percent of the EU-28 population. To

put this figure in context, net migration into both the EU-28 and the Schengen Area has been about 1.2

million annually since 2000.xvii But this new wave differs greatly in the characteristics of the migrants and

the circumstances under which they arrive.

The current and ongoing influx of refugees has been chaotic. But it also can be argued that it has

generated a short-term fiscal stimulus to the European economy, as governments race to improvise a

registration process and provide housing, social services and training programs for new arrivals. The

European Commission (2015) estimates that the refugee influx has led to additional fiscal expenditure in

2015 in the EU-28 of approximately 0.2 percent of GDP, with a smaller further increase expected in

2016. The short-term fiscal multipliers for this type of expenditures are highly uncertain, and the full

medium-term effect on GDP is still unclear, but they can be expected to be positive. The longer-term

economic implications, however, are more difficult to predict, as they depend crucially on longer-term

labor market participation rates.

What is already certain, however, is that recent developments will produce several of the same

dilemmas in Europe that have for decades confounded immigration and labor market policymakers in

United States.

7

The global demographic outlook and regional income differentials between Europe and its adjacent

regions make one thing clear: what Europe has witnessed since late 2015 is far from extraordinary. It is

the “new immigration normal” for the continent. In contrast to the Western Hemisphere, where only six

countries in Latin America are projected to see faster population growth in this category than the United

States, Europe’s neighbors in Africa and the Middle East are forecast to see the world’s largest

population increases in the 15-44 age category (Figure 4), with growth rates far above the often

gloomier outlooks in the EU.

Regardless of the outcome of conflicts in Syria, Iraq, Libya and elsewhere, economic migrants from

Europe’s near abroad will continue to stream toward what will remain a substantially more affluent

continent in the years and decades ahead. This will ensure that the call to “secure the border,” an often

cited refrain in U.S. politics, will be the first issue raised in any immigration-related debate in Europe.

Figure 5 shows the geographic origin of 2015 asylum seekers, highlighting the dramatic increase in

arrivals from Syria, Iraq and Afghanistan during the latter part of the year, but also that 40 percent of

asylum seekers arriving in Europe last year came from other parts of the world.

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Figure 4 Global Top 40 Countries in Growth of Ages 15-44 Category 2016-2030, %

Source: U.S. Census Bureau

Addendum:The U.S.

Neighborhood

8

Data from UNHCR (see appendix, Figures A6 and A7) meanwhile show that the gender distribution

among migrant groups arriving in Greece has dramatically shifted during the recent spike in arrivals. The

share of men dropped significantly in recent months as more women and children have arrived, in

particular from Syria, Iraq and Afghanistan. Today, men dominate only among arrivals from other

countries. The data suggest that these men are economic migrants rather than genuine refugees, and

hence will not be successful in their asylum petitions in Europe.

The huge backlog of applications means that one can only guess how many arrivals from Syria, Iraq and

Afghanistan will ultimately be given asylum. Historical data (see appendix Figure A8) suggests that only a

quarter of applicants in Europe have been approved to stay. Given the continuing open warfare in Syria

and Iraq, this acceptance share is likely to rise. Figure 5, nonetheless, poses the question whether

existing migration and asylum laws should be used to deal with the current influx, and if so how? This

question becomes more difficult when the law dictates that EU countries should expel, or at least seek

to expel, hundreds of thousands of likely rejected migrants. The expelled people would include both

asylum seekers and the unknown, but perhaps a large number of people who have recently entered

Europe illegally but have not registered as asylum seekers.

On the one hand, expelling them will be a colossal logistical and politically difficult task. But on the

other, not doing so would leave the Schengen Area with a large group of people unable to work in the

formal sector or benefit from existing social safety nets. In the latter scenario, Europe would become

home to a large, mostly ethnically demarcated group of “illegals,” constituting a new permanent

9

European economic underclass. This could have marked political and potentially macroeconomic effects,

for example on wage setting and the size of the informal sector in Europe.

The vast majority in this group will likely resist returning home.xviii Their countries of origin, in turn, may

either be unwilling to accept them or suffer from a level of domestic political instability that makes it

legally impossible for European authorities to carry out deportations. In recent years, only about 40

percent of rejected migrants in Europe have been sent home, though individual Schengen members who

bear this responsibility differ greatly in how they implement it (see appendix, Figure A9). If forced mass

expulsions were to become more commonplace, illegal migrants will likely try to move to those

countries in the Schengen Area where they perceive that there is lower risk of being caught and

expelled. This could prove politically contentious given the numbers involved.

The general failure in Europe to employ people of non-EU-28 origin has already been noted above, and

the recent inflow of refugees will pose even more difficult challenges to European labor market models.

Historically, labor market participation and outcomes for refugees tend to be poorer than for economic

migrants.xix This is not surprising given that the former often face legal barriers to employment (while

their asylum application is being processed) and have fled for reasons of personal safety, rather than

moving for economic interests. Refugees arriving at times when destination-country labor markets are

already under pressure—as in most of Europe outside Germany and the UK today—face even higher

obstacles.

Figure 6 underscores that educational attainment is the main driver of employment of both native and

foreign-bornxx workers throughout Europe. Foreign-born, high-skilled migrants have better employment

prospects across Europe than lower-skilled, native workers. Not enough is known about the wave of

newly arrived refugees to speculate on the skill profile of the wider group. But even in the highly unlikely

event that their skills matched those of native populations, recently arrived migrants would still face

substantial disadvantages compared with native workers in terms of language, culture, and social

capital.

10

Unfortunately for European policymakers, there is little that can be done in the short run—the refugees

have arrived, and their education and skills are what they are. In the long run, policymakers can only

hope to address this problem through costly job training efforts, comparable to the comprehensive use

of active labor market policies (ALMPs) in countries such as Denmark or Sweden. As refugees wait years

for that to happen, many of the technical skills they do have upon arrival may depreciate in labor market

value.

This means that European policymakers have a third “American-like” dilemma before them. On the one

hand, if European labor markets are not fundamentally reformed, it will almost certainly prove

impossible to absorb lesser-skilled migrants into the work force at anything close to native, or fiscally

sustainable, levels. Yet many of the likely required labor market reforms—including reducing social

contributions, making it easier to hire and fire workers, and accepting higher wage distribution—will

push Europe in the direction of the generally more diverse and laissez-faire American labor market

model. In other words, serious policy tradeoffs will have to be contemplated.

Figure 7 plots the difference between native and non-EU-28 employment rates in the EU-15 and the

economically similar Schengen Area members of Iceland, Norway and Switzerland.

Austria

Belgium

Czech Republic

Denmark

EstoniaFinland

France

Germany

Greece

Hungary

Ireland

Italy

Luxembourg

Netherlands

Poland

Portugal

Slovak Republic

Slovenia

Spain

Sweden

U.S.

UK

EU27

Austria

Belgium Czech Republic

Denmark

EstoniaFinlandFrance

Germany

Greece

HungaryIreland

Italy

Luxembourg

Netherlands

Poland

Portugal

Slovak RepublicSlovenia

Spain

Sweden

U.S.

UK

EU27

Austria

Belgium

Czech Republic

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Ireland

Italy

Luxembourg

Netherlands

Poland

Portugal

Slovenia

Spain

Sweden

U.S.

UK

EU27

30

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60

70

80

90

100

30 40 50 60 70 80 90 100

Nat

ive

Po

pu

lati

on

, Pe

rce

nt

Foreign-Born Population, Percent

Figure 6 Employment Rates by Place of Birth and Educational Attainment, 2013, Ages 25-64

High-Skilled Medium-Skilled Low Skilled

Source: OECD

45' Line

EU Employment Target of 75%

EU Em

plo

yme

nt Targe

to

f 75

%

11

A clear correlation is evident between broad wage inequality—measured as the ratio between the wage

decile limits of the ninth and first deciles—and countries’ ability to employ non-EU-28 migrants at levels

approaching native workers. Allowing for higher wage inequality would improve employment prospects

for Europe’s recent non-EU-28 migrants, particularly in those countries where wage inequality is lower

but migrant unemployment is higher. Many opponents would certainly challenge such a policy step,

however, on the grounds that it could increase general inequality in societies, undermine established

minimum wages, and result in native workers losing their jobs to new arrivals.

That said, many European countries have been willing to improve employment rates among certain

groups by exempting them from laws such as the minimum wage. A classic example is youth exemptions

from the minimum wage, which in Netherlandsxxi and Denmarkxxii have materially increased employment

rates for young people (see figure A10).

In addition to addressing inequality and social concerns, Europe must accept that raising employment of

migrants to sustainable levels will involve a degree of capital-to-labor substitution, which will reduce

measured productivity (both labor and total factor productivity) and potentially lower future capital

investment.

Sweden

Netherlands

Denmark

Britain

Austria

Finland

Luxembourg

France

Portugal

Belgium

Ireland

Spain

Italy

Greece

Iceland

Norway

Switzerland

Addendum:United States difference between native and all foreign-born, Ages

15-64

R² = 0.2353

-20

-15

-10

-5

0

5

2 2.5 3 3.5 4 4.5 5 5.5

Dif

fere

nce

in T

ota

l Em

plo

ymen

t R

ate

for

Age

s 1

5-6

4 G

rou

p

Ratio of earnings decile limits of the 9th decile and the 1st decile.

Figure 7 Employment by Country of Birth and Wage Distribution, 2014

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III What Europe Needs to Do

In recent decades, Europe has had a successful record in greatly increasing the inward migration needed

to make up for its natural population decline. But the dramatic increase in refugee arrivals of recent

months poses an unprecedented challenge. The political potency of the crisis cannot be

underestimated, as it has the potential to undermine popular support for mainstream centrist parties in

Europe, and the political foundation for the EU itself. Yet the existential risk posed by massive refugee

inflows could also speed up a necessary process of integration in Europe, a normalization of migration

and its institutions that would be politically impossible in normal times. At the same time, given the

existing constraints on the EU budget and member states’ differing appetite for further integration,

migration policy cannot successfully be negotiated at the EU-28/full Schengen level. Instead, a coalition

of willing member states must be established and required fiscal resources made available directly by

their governments.

Kirkegaard (2015b) presents a comprehensive plan for the establishment of a European Migration and

Mobility Union (MMU), but European migration-related reforms at the national and supra-national level

should include:

1. Harmonize Rules for Deportation of Rejected Migrants. To avoid “leakage”—asylum seekers

moving between member states to avoid having to leave Europe—deportation rules,

procedures and logistics must be harmonized and carried out jointly. The recent agreement with

Turkeyxxiii can in some ways be seen as a first step. It calls for migrants arriving in Greece on their

way to other European destinations to be returned to Turkey under a process paid for by the EU,

following an asylum process overseen by bureaucrats and fully complying with all European laws

and international commitments. In the future this will include chartering planes at the European

level and creating a single list of “safe return countries.” A combination of carrot-and-stick

initiatives should be utilized to persuade origin countries to accept their nationals back. This

should include the threat to withdraw overseas development aid, but at the same time promises

of new investments or other bilateral political and economic incentives to origin countries that

cooperate with Europe.

2. Reform Labor Markets to Facilitate Increased Employment of Non-EU-28 Migrants. Several

reform avenues can potentially benefit both migrant and native workers:

a. Reduction of existing barriers to hiring and firing: This will help persuade employers,

especially of small and medium-sized businesses, to take what will be perceived as the

additional risk of hiring a non-EU-28 migrant.

b. Reduce high tax wedges for lower-skilled workers: This will increase employability of

many non-EU migrants (and lower-skilled natives) and could include targeted wage

subsidies for some migrant groups.

c. Provide temporary exemption from minimum wages to non-EU-28 migrants: A

temporary exemption from minimum wages, gradually phased out over three to five

years, will enable more migrants to gain a foothold in the labor force. Migrants could be

paid along the lines of youth or apprentices in some European countries: 40 percent

13

below minimum wages in year one, rising gradually to normal minimum wages in year

four.

d. Introduce mandatory work readiness training programs for non-EU-28 migrants: ALMPs

must be tailored to migrants’ needs, including with regard to language and social skills.

Access to some social services and housing support should be directly linked to

participation in the training (particularly important for women).

e. Improve opportunities for self-employment: Entrepreneurship is an important source of

employment for many migrants. Governments can facilitate it via targeted seed funds

for migrant entrepreneurs, one-stop startup shops, and a general strengthening of

completion policy and reduction in incumbent protection.

3. Secure Schengen’s External Border. The U.S. federal government spent approximately $32 billion

(€29 billion) on external border control in 2015, including land border control, Coast Guard, customs

and immigration processing. If internal open borders are to be maintained amid ongoing migration

pressure, external border control can no longer be an exclusive national responsibility. The ad hoc

missions of the €254 million (2016 budget) Frontex agency are woefully inadequate. The European

Commission’s proposalxxiv to create an embryonic European Border and Coast Guard (EBCG) by 2020

is a good aspiration, but the task is of a magnitude that can only be quickly implemented outside the

existing EU budget. This will require new fiscal resources, personnel and material transferred

directly from participating member states to a new supra-national institution. As discussed in

Kirkegaard (2015), financing of Schengen Area external border control (and other related

immigration tasks) could include:

a. Direct member state funding out of existing national fiscal resources.xxv

b. “Migration system user fee” income from administrative immigration levies.

c. Broader indirect user fees from earmarked levy revenue from wider categories of goods

and services.xxvi

d. The introduction of migration and mobility bonds,xxvii which would be jointly guaranteed

by participating member states and also backed by earmarked levy fees.

The issuance of migration and mobility bonds would also establish an issue-specific central fiscal

capacity in Europe to deal with the shared problem of external border control and migration

management.

4. Establish Annual Category Ranges for Europe-Wide Inward Migration: Willing member states should

begin to harmonize existing national rules for asylum and other residency permits. The U.S.

distribution of 140,000 employment-based “green cards” each year could be a model,xxviii and

aggregate common annual inward migration ranges could be agreed for some categories. A

distinction might be made between European law–based blue migration and national law–based red

migration, for both temporary and permanent residency and work permits. Blue migration entrants

might work, study and reside within the proposed union and would account for the majority of

regional employment-based migration and student residencies. Under the red migration category,

member states would remain responsible for most family-based migration and other categories of

national interest, and free to set their own upper limits. Categorizing migration this way would be

another example of the European Union’s ability to navigate the fine line between national and

14

pooled sovereignty, a pragmatic response to political, economic and societal needs at any given

point in time.

About the Author:

Jacob Funk Kirkegaard is a senior fellow with the Peterson Institute for International Economics in

Washington, DC.

Before joining the Institute in 2002, he worked with the Danish Ministry of Defense, the United Nations

in Iraq, and in the private financial sector.

He is a graduate of the Danish Army's Special School of Intelligence and Linguistics with the rank of first

lieutenant; the University of Aarhus in Aarhus, Denmark; the Columbia University in New York; and

received his PhD from Johns Hopkins University, School of Advanced International Studies.

His current research focuses on European economies and reform, foreign direct investment trends and

estimations, pension systems, demographics, offshoring, high-skilled immigration, and the impact of

information technology.

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Borders, press release December 15, 2015, available at http://europa.eu/rapid/press-release_IP-15-

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IMF (2016). The Refugee Surge in Europe: Economic Challenges. Staff Discussion Note SDN/16/02,

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Kerr, Sari P., and William Kerr (2011). Economic Impacts of Immigration: A Survey? Finnish Economic

Papers 24 (1): 1–32.

Kirkegaard, J.F. (2015a) The Economic Scope and Future of US-India Labor Migration Issues. Peterson

Institute Working Paper 15-1, available at http://www.piie.com/publications/wp/wp15-1.pdf

Kirkegaard, J.F. (2015b) Toward a European Migration and Mobility Union. Peterson Institute Policy Brief

15-23, available at http://www.piie.com/publications/pb/pb15-23.pdf

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Ott, Eleanor (2013). The Labour Market Integration of Resettled Refugees. Evaluation Report 2013/6,

United Nations High Commissioner for Refugees Policy Development and Evaluation Services.

UNHCR (2016a). Trends of men, children and women arriving to Greece (June 2015 - January 2016).

Available at http://data.unhcr.org/mediterranean/download.php?id=587

UNHCR (2016b). Monthly Trends of Nationalities, gender and age - January 2016 – Greece. Available at

http://data.unhcr.org/mediterranean/download.php?id=692

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Appendix Figure A1-A10

17

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Figure A7 Gender and Country of Origin of Seaborne Arrivals in Greece January 2016

Men Women Children

Source: UNHCR (2016a)

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0%

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2008 2009 2010 2011 2012 2013 2014 2015 (1)

Figure A8 Applications and Decisions on Schengen Area Asylum Status, 2008-2015

Total First Time Applications Total First Instance Decisions First Instance Rejections Total Final Decisions

Final Rejections First Instance Rejections Share (RHS) Final Rejections Share (RHS)

1) 2015 data incomplete with only some Schengen member states reporting. Source: Eurostat

24

25

i The EU-28 population ages 15-64 peaked in 2009 at 333.5 million, and in the EA-19 at 219.8 million. Data from Eurostat series “lfsi_act_a” at http://ec.europa.eu/eurostat/data/database#. ii Arguably the issue of regular statistical adjustments—reflecting new census data collected or other statistical updates of, for instance, illegal immigrant numbers that must be estimated—amounts to a separate third channel of change. However, this concerns statistical accuracy and reporting, rather than changes in the real world. Over longer periods of time, statistical adjustments tend to even themselves out (otherwise statistical agencies’ methodologies would have to be changed), and they are as a result generally reported as part of another category for presentational simplicity reasons. As net migration data are themselves subject to regular specific revisions over time, all statistical adjustments are generally reported as part of this category. iii This is in stark contrast to the developments in the early 20th century, where rising life expectancies were driven predominantly by declines in infant and child mortality. iv See, for instance, OECD (2007), available at http://www.oecd.org/els/family/babiesandbosses-reconcilingworkandfamilylifeasynthesisoffindingsforoecdcountries.htm, and OECD (2011). v Gross OECD data for the total temporary and permanent inflow of foreign population into the United States and the roughly 20 EU member states for which data is available yields a similar picture with the European aggregate higher than that of the United States. See OECD (2015), Table A.1. Japanese statistical austerities rely on five-year adjustments between censuses, which from 2006-2010 was an annual 131,000 people, or more than 1 in 1,000 each year. The pick-up in the Japanese data from 2006-2010 witnessed in Figure 1 is hence entirely due to the statistical adjustment term; actual Japanese net migration in this period remained negative. See Statistics Japan (2014) for details and OECD data at http://stats.oecd.org/BrandedView.aspx?oecd_bv_id=lfs-data-en&doi=data-00287-en.

EU28

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Figure A10 EU15 Employment Rates Ages 15-19, By Educational Attainment, 2014

"Employed Persons" are persons aged 15 and over who performed work, even for just one hour per week, for pay, profit or family gain during the reference week. Source: Eurostat

26

vi These German data incorporate the population of the former East Germany before 1990. vii The natural rate of population change in Japan, known for its sluggish demographics, actually did not turn negative until 2006, 34 years later than in Germany. viii Spanish natural population change has never been negative, while Italy’s, after falling to close to zero in the early 1990s, became persistently negative only after the global financial crisis began in 2008. ix Spain from the mid-1990s to 2009 and Italy after 2001. x Material validity concerns surround cross-country data analysis of permanent migration inflows due to the lack of a common definition and very different national legal frameworks. The data presented here relies on an OECD-defined standardized series for “permanent-type” inward migration, covering people considered to be permanent migrants viewed from the perspective of the destination country. Included are persons granted a residence permit that is more or less indefinitely renewable, even if subject to conditions such as being employed. The following categories are excluded: international students, trainees, persons in exchange programs, seasonal and contract workers, service providers, installers, artists and athletes. See OECD (2010), Box I.1, for details. xi This category includes family members of existing residents (e.g., family reunification) and family members accompanying new permanent workers. xii This category includes persons admitted both under international treaty obligations (e.g., UN quota refugees) and persons admitted under national asylum rules. Family members admitted for humanitarian reasons as accompanying persons to refugees are also included in this category. xiii This category consists mostly of admitted retirees (without the right to work) and persons admitted based on their personal ancestry links to the destination country. xiv The Trans-Tasman Mutual Recognition Arrangement (TTMRA) between Australia and New Zealand came into force in 1998 and covers skilled workers so that someone registered to practice an occupation in one country is entitled to practice an equivalent occupation in the other country, without further testing or examination. xv Relying on cross-border data broken down by geographic location of birth is preferable when analyzing the economic plight of the migrant community. This is due to the very different national rules for granting foreign nationals citizenship. xvi Data at this level of detail are unavailable for Germany. xvii Data from Eurostat (demo_gind) time series, including statistical adjustments. Available at http://ec.europa.eu/eurostat/data/database xviii Available Eurostat data for the manner of returns of third-country nationals for 16 EU members in 2014, covering almost 68,000 cases, suggest that approximately two-thirds of actual returns were enforced and one-third were voluntary. xix See, for instance, IMF (2015), Ott (2013), Kerr and Kerr (2013), Aldén and Hammarstedt (2014) and Hatton (2014). xx No employment data is available broken down by educational attainment for only non-EU28 migrants. xxi In the Netherlands, minimum wages rise only gradually for workers from age 15-23. The rate starts at 15 at only 30 percent of the minimum wage, rising to 35 percent at age 16, 40 percent at 17, 45 percent at age 18, 52 percent at age 19, 2 percent at age 20, 72 percent at age 21, 85 percent at age 22 and finally 100 percent at ages 23 and above. See https://www.government.nl/topics/minimum-wage/contents/amount-of-the-minimum-wage xxii In Denmark, youth under the age of 18 can, according to many sectoral collective bargaining agreements, be paid wages far below regular minimum wages (typically only 40-60 percent). See, for instance, http://www.jobpatruljen.dk/lonsatser/byggeri/ xxiii See http://www.consilium.europa.eu/en/press/press-releases/2016/03/18-eu-turkey-statement/ xxiv Available at http://europa.eu/rapid/press-release_IP-15-6327_en.htm xxv This type of common funding was proposed by German economics minister Sigmar Gabriel and France’s Emanuel Macron in late 2015, as discussed at the time in the media at http://www.politico.eu/article/french-german-ministers-want-e10-bn-eu-security-refugee-fund/ xxvi This was proposed by German Finance Minister Wolfgang Schäuble in an newspaper interview in Suddeutsche Zeitung, available at http://www.sueddeutsche.de/politik/bundesfinanzminister-wolfgang-schaeuble-die-rueckkehr-sollte-der-normalfall-sein-1.2820309 xxvii The Italian government’s recent policy paper makes a similar suggestion in section 2.8. See http://www.governo.it/sites/governo.it/files/ASharedPolicyStrategy_20160222.pdf xxviii See Kirkegaard (2015a) for a detailed analysis of the US migration system.