Back Matter

Back Matter

International Monetary Fund. European Dept.
Published Date:
October 2008
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    Note: The main authors of this chapter are Rudolfs Bems and Philip Schellekens. Analytical underpinnings are provided in Bems and Schellekens (forthcoming).

    The NMS comprise Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, and Slovenia.

    World Bank (2006).

    Worker registration systems, for example, may not be able to ensure that workers deregister when they leave the destination country. This would cause the measure of inflows to be overstated.

    Brücker (2007). These figures are based on labor force and population statistics.

    Kaczmarczyk and Okólski (2008).

    Ireland attracted large migrant inflows from Lithuania, Poland, and Romania; the United Kingdom, from various countries but especially Poland.

    Other countries where restrictions were applied regarding access of Bulgarian and Romanian workers during the first stage of the transitory arrangements include the Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Poland, Slovenia, the Slovak Republic, and Finland.

    Iara (2008).

    Low-cost airlines have facilitated the practice of “blue-collar” air commuting.

    World Bank (2006).

    Budnik (2007) and Kaczmarczyk and Okólski (2008).

    However, average educational attainment levels might have been higher if highly educated migrants had not left.

    These ratios are calculated as the simple unweighted average of the per capita income positions of Estonia, Latvia, and Lithuania to that of the EU-27.

    The asymmetric treatment of productivity developments in the nontradable and tradable sectors does not result in a loss of generality. Its sole purpose here is to generate the Balassa-Samuelson effect of price convergence.

    The theoretical underpinnings of the two stages of convergence are detailed in Bems and Schellekens (2007).

    This is not to say that labor mobility is the only source of wage pressure. An inflationary macroeconomic policy mix may constitute an additional source of wage inflation.

    The general equilibrium model in Bems and Schellekens (forthcoming) assumes a utility-maximizing representative household, a fraction of which can work abroad and earn the foreign wage.

    Return migration is driven not only by the nature of the productivity shock, but also by imperfections in the degree of factor mobility, which amplify wage developments during transition. As labor flows out, capital cannot be immediately reduced to the optimal level. Thus, wages are temporarily “too high” in transition, which triggers return migration.

    Other challenges, relating to the distributional impact of cross-border labor mobility, are beyond the scope of this chapter.

    If labor flows out, optimality would require dismantling the capital stock, as the remaining labor force would have too much capital.

    In a setting with a labor-leisure choice, employment could increase during the boom years, alleviating some of the wage pressure

    Kaczmarczyk and Okólski (2008) report that most expenses by seasonal migrants who worked in Germany during 1998–2000 fall under the category of current consumption.

    Overheating may also result from an inappropriate policy mix.

    Statistics Estonia, Labor Force Surveys.

    These non-EU countries may soon, however, face similar problems of labor shortage.

    Romania, for example, launched initiatives to persuade Romanian construction workers to return home and fill domestic job vacancies.

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