“Action and reaction” – The economic and labor market effects on youth’s European mobility

Abstract

Within the framework of the MOVE project, we are carrying out quantitative analysis for European Union/EFTA countries. We aimed to reveal the labor market and economic effects of youth mobility. After the introduction, we describe the theoretical framework of youth mobility. This includes the center-periphery model, the brain-drain effect and effects on labor market and on economic growth. Then, we construct two models describing how inward youth mobility affects youth unemployment and prosperity. In this, we also examine economic, social and state indicators. In the third section, we apply panel OLS regression analysis for modeling. In total, we examined data of about 30 European countries for ten years (2004–2013).

In our analysis, we grouped countries into three categories: center-receiving countries, periphery-sending countries, and all the included EU/EFTA countries. We also controlled for economic, social and state indicators like minimum wages, outward FDI, adult education level or urban population which might have influenced receiving countries’ youth unemployment rate and per capita GDP. Our hypotheses were that incoming youth mobility increase favorably affects the labor market and economic growth potential. That is, it decreases youth unemployment and increases per capita GDP in the receiving countries in all the three cases. In the results of the analysis, we establish that, in all the examined country groups, incoming youth mobility decreases youth unemployment rate and promotes economic growth in the receiving countries which supports both our hypotheses.

Our results can contribute to the elaboration of the Human Resource Strategy of the European Union. It has become obvious that the benefits in both the sending and receiving countries can increase by controlling youth mobility. We widened the former two-actor model (based on the migrant and the receiving country) by also considering the sending country, the organizing institution and the multinational and domestic companies. All these actors benefit from the movement elasticity of potential labor force.