How did EU Eastern enlargement affect migrant labor supply in Austria?

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1 How did EU Eastern enlargement affect migrant labor supply in Austria? Julia Schmieder & Andrea Weber Vienna University of Economics and Business, DIW, FU & IZA Central European University, WU, WIFO & IZA OENB 83 rd East Jour Fixe Vienna, September 18, 2018 Schmieder & Weber CESEE migrants labor supply in Austria 1 / 14

2 Motivation Impact of the EU Eastern enlargement on the Austrian labor market already widely discussed before 2004 Concerns about sudden labor supply shock due to substantial wage differentials and geographic proximity 7-year transition period with controlled immigration rules In recent years, rising numbers of immigrants from Eastern European countries have returned to public attention Schmieder & Weber CESEE migrants labor supply in Austria 2 / 14

3 This paper Development of labor supply from Central, Eastern and Southeastern European (CESEE) EU Member States in the Austrian labor market Labor supply defined as the stock of employed workers Focus on period around EU entry and free labor market access to Austria 1 Change in time trends of immigrant stocks from new member country groups 2 Change in composition of immigrant workers Schmieder & Weber CESEE migrants labor supply in Austria 3 / 14

4 EU enlargement and labor market access of CESEE citizens Table: Overview EU enlargements Group EU accession date Free movement of workers to Austria CESEE-8 May May CESEE-2 January January Croatia July No later than July CESEE-8: Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia CESEE-2: Romania, Bulgaria Option to restrict labor market access for workers from new member countries up to 7 years Austrian (and German) governments opted for restriction with maximum transition period Schmieder & Weber CESEE migrants labor supply in Austria 4 / 14

5 EU enlargement and labor market access of CESEE citizens (cont d) 1 Before EU entry Work permit required Public Employment Service need to confirm that no equally qualified Austrian worker available Simplified application procedures for specific groups, mainly high-skilled or seasonal workers 2 During transition period Work permits still required for low-skilled workers, but now priority given over workers from non-eu countries 3 End of transition period Unrestricted access to the Austrian labor market in line with the fundamental principle of free movement of workers in the EU Schmieder & Weber CESEE migrants labor supply in Austria 5 / 14

6 Data and Sample Austrian Social Security Database: universe of employment in private sector Individual demographic characteristics including nationality, employment spells, earnings, and employers characteristics We create a quarterly panel at the individual worker level January July 2017 Worker defined as individual employed in blue- or white collar job for more than 20 days in given quarter Self-employed, posted workers, and workers in the black market not included Schmieder & Weber CESEE migrants labor supply in Austria 6 / 14

7 Number of employees in Austria from CESEE-8, CESEE-2 countries, and Croatia, Schmieder & Weber CESEE migrants labor supply in Austria 7 / 14

8 How did free labor market access change the composition of the migrant workforce? Change in demographics & job characteristics CESEE-8 Austrian Female (%) [38.3] [47.0] Age in years [39.2] [39.3] Blue-Collar (%) [73.8] [36.7] Employment during 3-year time period (%) [72.3] [87.5] Real daily earnings EUR (year 2000 prices) Mean [56.6] [71.2] 10th percentile [27.6] [30.9] 90th percentile [87.7] [124.7] Notes: Change from 3 years before to after May 2011, mean before May 2011 in brackets Schmieder & Weber CESEE migrants labor supply in Austria 8 / 14

9 Mean Age of Migrant Workers Schmieder & Weber CESEE migrants labor supply in Austria 9 / 14

10 Mean Wage of Migrant Workers Schmieder & Weber CESEE migrants labor supply in Austria 10 / 14

11 CESEE-8 employees across industries 25% of CESEE-8 migrants in services employed either by temporary employment agencies or in janitorial services Sectoral concentration among CESEE-8 workers slightly increased with free labor market access Schmieder & Weber CESEE migrants labor supply in Austria 11 / 14

12 Change in firm characteristics CESEE-8 Austrian Firm age in years [16.4] [20.9] Firm younger than 3 years (%) [16.8] [10.1] Number of blue- and white-collar workers at firm [583] [1,047] Non-Austrian workers at firm (%) [45.0] [13.9] Workers with same nationality at firm (%) [24.2] [84.3] Mean mthly. earnings at firm (EUR, year 2000 prices) [1,532] [1,812] Notes: Change from 3 years before to after May 2011; mean before May 2011 in brackets Schmieder & Weber CESEE migrants labor supply in Austria 12 / 14

13 CESEE-8 employees across NUTS-3 regions Notes: These maps illustrate the mean number of employees from CESEE-8 countries in the 5 years before and after May, 2011, the date at which free movement of workers was established, across NUTS 3 regions. The cutoffs for the categories are the 25th (659), 50th (1,322) and 75th percentile (2,278) of the mean number of employees across NUTS 3 regions and time periods. Schmieder & Weber CESEE migrants labor supply in Austria 13 / 14

14 Conclusions From 2003 to 2016, the stock of employed CESEE workers grew by a factor of 4 Transition period was effective in restricting labor market access Growth accelerated persistently after the complete labor market access With free movement of labor shift in the composition of migrant workers toward lower-qualified and younger groups Large share of migrant workers employed in seasonal industries and in border regions closest to their home Schmieder & Weber CESEE migrants labor supply in Austria 14 / 14