European Migration
Lessons from the South

Policy-makers in many EU countries are concerned about both low labour mobility within the Union and growing migration pressures from without. In Discussion Paper No. 964, Research Fellow Riccardo Faini and Alessandra Venturini investigate the relationship between migration and growth to shed light on internal and external labour mobility. In their model, potential migrants generally prefer to remain at home to avoid the social, cultural and psychological costs of moving abroad, so income growth in the home country may prompt them to consume more of its amenities and thus reduce their propensity to migrate. If the home country is relatively poor, however, a rise in its income may relax financial and/or educational constraints that have previously prevented would-be migrants from moving, so migration flows may increase. Overall, migration and income are likely to exhibit a non-linear, hump-shaped relationship.

Faini and Venturini then focus on the South European countries, which were the major source of migration to Northern Europe for several decades but are now the destination of substantial labour flows from North Africa and other poor countries. While the dramatic fall in migration flows from Southern Europe after the first oil shock is often attributed to a fall in the receiving countries' labour demand, these flows did not resume even in the 1980s, when economic conditions in Northern Europe recovered markedly. Neither the behaviour of wage differentials nor the evolution of relative labour market conditions can account for this pattern. Faini and Venturini perform regressions to disentangle the effects of demand, supply and demographic factors on emigration from Spain, Greece, Portugal and Turkey during 1962-88. Both individual country analysis and pooled estimations provide substantial support for their approach, indicating that demographic factors played no significant role and that the turning-point was about $4,000 in 1985 prices. They therefore predict that the propensity to migrate from South European countries will decline steadily while migration pressures from North African and other developing countries are likely to increase as their incomes grow further.

Migration and Growth: The Experience of Southern Europe
Riccardo Faini and Alessandra Venturini

Discussion Paper No. 964, May 1994 (HR)