DP964 | Migration and Growth: The Experience of Southern Europe

Publication Date

31/05/1994

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Abstract

Policy-makers in European countries typically complain about the low level of labour mobility within Europe. At the same time they appear to be increasingly concerned about growing migration pressures from outside the European Community. In this paper, we try to cast some light on the issues of both internal and external labour mobility. We investigate the link between migration and growth. We argue that in a relatively poor sending country, an increase in the wage will have a positive impact on the propensity to migrate (by providing the resources to enable a migrant to move), even if we control for the wage differential with the receiving country. Conversely, if the home country is relatively well off, an increase in the wage there will work towards a reduction in the pressure to migrate. Econometric estimation for Southern Europe over the period 1962<196>88 provides substantial support for our approach. We estimate the turning point in the migration-income link at around $4000 in 1985 prices. We predict, therefore, a steady decline in the propensity to migrate from South European countries. Similarly, our results highlight the possibility that the pressure to migrate from North African countries and other developing countries may increase with further growth.