Migration and Integration. Common Challenges and Responses from Europe and Asia

With the signing of the ASEAN Framework Agreement for the Integration of Priority Sectors (FA) in 2004, migration and integration issues gained significance on the agenda. Primarily concerned with increasing economic growth, this framework excludes the integration of low and unskilled migrant workers; instead, ASEAN efforts to address migration and integration issues have been limited to Mutual Recognition Agreements for skilled labour and professionals. After an analysis of migration policy in the region, we highlight specific barriers to the integration of labour migrants in two priority sectors – nursing, which is highly regulated by the state, and Information, Communications and Technology (ICT), which is typically selfregulated and privately run. Despite a MRA for nursing allowing registered nurses to practice in another ASEAN country under supervision of local nurses without registering with the host country’s nursing regulatory authority, in practice, there are major barriers to the free movement of nurses within ASEAN in terms of skills recognition, licensure requirements and other protectionist measures. Although regulations governing the inflow of ICT professionals are not as stringent as those for healthcare professionals, private costs associated with job search and gaining foreign employment are higher in the ICT sector, largely due to limited information on international mobility within the industry. Three sets of barriers to greater integration are discussed. First, the economic and political diversity within ASEAN makes integration more problematic than in the European Union. Second, the primary concern with value-adding economic growth means that regional agreements are focused on skilled and professional labour migration only. Third, the “ASEAN way” of doing things – via a strong emphasis on consensus and non-interference with domestic policies – often means that the FA provision for the free movement of labour is usually trumped by domestic policies that do not reflect the same desire for labour integration.

Factor Markets in Applied Equilibrium Models: The current state and planned extensions towards an improved presentation of factor markets in agriculture. Factor Markets Working Paper No. 23, February 2012

This paper describes how factor markets are presented in applied equilibrium models and how we plan to improve and to extend the presentation of factor markets in two specific models: MAGNET and ESIM. We do not argue that partial equilibrium models should become more ‘general’ in the sense of integrating all factor markets, but that the shift of agricultural income policies to decoupled payments linked to land in the EU necessitates the inclusion of land markets in policy-relevant modelling tools. To this end, this paper outlines options to integrate land markets in partial equilibrium models. A special feature of general equilibrium models is the inclusion of fully integrated factor markets in the system of equations to describe the functionality of a single country or a group of countries. Thus, this paper focuses on the implementation and improved representation of agricultural factor markets (land, labour and capital) in computable general equilibrium (CGE) models. This paper outlines the presentation of factor markets with an overview of currently applied CGE models and describes selected options to improve and extend the current factor market modelling in the MAGNET model, which also uses the results and empirical findings of our partners in this FP project.

The Labour Allocation Decisions of Farm Households: Defining a theoretical model. Factor Markets Working Paper No. 31, October 2012

This paper presents a theoretical model for the analysis of decisions regarding farm household labour allocation. The agricultural household model is selected as the most appropriate theoretical framework; a model based on the assumption that households behave to maximise utility, which is a function of consumption and leisure, and is subject to time and budget constraints. The model can be used to describe the role of government subsidies in farm household labour allocation decisions; in particular the impact of decoupled subsidies on labour allocation can be examined. Decoupled subsidies are a labour-free payment and as such represent an increase in labour-free income or wealth. An increase in wealth allows farm households to work less while maintaining consumption. On the other hand, decoupled subsidies represent a decline in the return to farm labour and may lead to a substitution effect, i.e., farmers may choose to substitute non-farm work for farm work. The theoretical framework proposed in this paper allows for the examination of these two conflicting effects.

The Reallocation of Agricultural Labour across Sectors: An Empirical Strategy for Micro Data. Factor Markets Working Document No. 45, May 2013

This paper presents an empirical methodology for studying the reallocation of agricultural labour across sectors from micro data. Whereas different approaches have been employed in the literature to better understand the mobility of labour, looking at the determinants to exit farm employment and enter off-farm activities, the initial decision of individuals to work in agriculture, as opposed to other sectors, has often been neglected. The proposed methodology controls for the selectivity bias, which may arise in the presence of a non-random sample of the population, in this context those in agricultural employment, which would lead to biased and inconsistent estimates. A 3-step multivariate probit with two selection and one outcome equations constitutes the selected empirical approach to explore the determinants of farm labour to exit agriculture and switch occupational sector. The model can be used to take into account the different market and production structures across European member states on the allocation of agricultural labour and its adjustments.

Reform momentum and its impact on Greek growth. Bruegel Policy Contribution 2015/12, July 2015

Greece has an imperfect track-record of structural reform implementation. However, the poor growth outcome of the Greek programmes is also a consequence of the timing and composition of reforms, which were not optimally geared towards a speedy transition to a new growth model based on the private sector. While the main responsibility for this lies with the Greek authorities, international institutions share the responsibility for the poor growth-enhancing effect of reforms. In the current context, further structural reform efforts should be mainly targeted at supporting Greece's speedy return to solid growth rates. This is not only because poverty and unemployment have reached very high levels, but also for political economy reasons: reforms must quickly be seen to be working in order to buttress the consensus in favour of reform. Further efforts should be made to improve Greece’s business environment and to liberalise product markets, in addition to shifting taxation away from labour and towards consumption. Reforms to improve the quality of institutions should continue and are very much needed in the Greek setting, while taking into account that their demanding implementation might use up administrative capacity and their impact on growth will only be seen over long time horizons.

The transatlantic growth gap. CEPS Commentary, 5 August 2014

Daniel Gros argues in this commentary that the cause of the transatlantic growth gap following the recovery starting in 2010 from the global financial crisis should not be sought in excessive eurozone austerity or the excessive prudence of the European Central Bank. Rather, compared to the US, he argues that the excess debt created in the EU during the boom years has been much more difficult to work off. He acknowledges that European officials are right to promote structural reforms of EU countries’ labour and product markets, but advises that they should also focus on overhauling and accelerating bankruptcy procedures, so that losses can be recognised more quickly and over-indebted households can start afresh, rather than being shackled for years.

Factor Markets in General Computable Equilibrium Models. Factor Markets Working Document No. 47, May 2013

One objective of Computable general equilibrium (CGE) models is the analysis of economy-wide effects of policy measures. The focus of the Factor Markets project is to analyse the functioning of factor markets for agriculture in the EU-27, including the Candidate Countries. While agricultural and food markets are fully integrated in a European single market, subject to an EU-wide common policy, the Common Agricultural Policy (CAP), this is not the case for the agricultural factor markets capital, labour and land. There are partly serious differences with regard to member state regulations and institutions affecting land, labour and capital markets. The presentation of this heterogeneity of factor markets amongst EU Member States have been implemented in the CGE models to improve model-based analyses of the CAP and other policy measures affecting agricultural production. This final report comprises the outcome of a systematic extension and improvement of the Modular Applied GeNeral Equilibrium Tool (MAGNET) model starting from an overview of the current state of the art to represent factor markets in CGE models to a description of work on labour, land and capital in MAGNET.

Synthesis Report on the Impact of Capital Use. Factor Markets Working Document No. 57, August 2013

This paper examines the drivers of productivity in EU agriculture from a factor markets perspective. Using econometrically estimated production elasticities and shadow prices of factors for a set of eight EU member states, we focus on field crop farms represented in the FADN database for the years 2002-08. As it turned out that output reacts most elastically to materials input, we investigate this factor further and find different rationing regimes represented in different member states. Marginal return on materials is low in Denmark and West Germany, but significantly above typical market interest rates in East Germany, Italy and Spain. In the latter countries and in Denmark it also increased towards the end of the observed period. This finding is consistent with a perception of tightening funding access, possibly induced or reinforced by the unfolding financial crisis. Marginal returns to land, labour and fixed capital are generally low. We conclude that the functioning of factor markets plays a crucial role for productivity growth, but that factor market operations display considerable heterogeneity across EU member states.

The Danish Flexicurity Model - a Lesson for the US? ACES Working Paper No. 2, May 2007

Within recent years, increasing international competition has caused an increase in job transitions worldwide. Many countries find it difficult to manage these transitions in a way that ensures a match between labour and demand. One of the countries that seem to manage the transitions in a successful way is Denmark, where unemployment has been dropping dramatically over the last decade without a drop in job quality. This success is ascribed the so-called Danish flexicurity model, where an easy access to hiring and firing employees (flexibility) is combined with extensive active and passive labour market policies (security). The Danish results have gained interest not only among other European countries, where unemployment rates remain high, but also in the US, where job loss is often related to lower job quality. It has, however, been subject to much debate both in Europe and in the US, whether or not countries with distinctively different political-economic settings can learn from one another. Some have argued that cultural differences impose barriers to successful policy transfer, whereas others see it as a perfectly rational calculus to introduce 'best practices' from elsewhere. This paper presents a third strategy. Recent literature on policy transfer suggests that successful cross national policy transfer is possible, even across the Atlantic, but that one must be cautious in choosing the form, content and level of the learning process. By analysing and comparing the labour market policies and their settings in Denmark and the US in detail, this paper addresses the question, what and how the US can learn from the Danish model. Where the US and Denmark share a high degree of flexibility, they differ significantly on the level of security. This also means that the Danish budget for active and passive labour market policies is significantly higher than the American, and it seems unlikely that political support for the introduction of Danish levels of security in the US can be established. However, the paper concludes that there is a learning potential between the US and Demnark in the different local level efficiency of the money already spent. A major reason for the Danish success has been the introduction of tailor made initiatives to the single displaced worker and a stronger coordination between local level actors. Both of which are issues, where a lack of efficiency in the implementation of American active labour market policies has been reported.

Five things we need to know about the on-demand economy. CEPS Essay No. 21/8 January 2016

The last few years have witnessed the exponential growth of platforms like Uber and Airbnb and the creation of countless other less well-known examples. The expansion of the on-demand economy puts huge pressure on regulators to adapt it to the existing frameworks for labour and taxation. The rapid growth of the sector also divides experts: it is seen by many as threat for working conditions, and by others as an incredible opportunity. The purpose of this essay is to take a balanced perspective on what we know about the on-demand economy and what needs further investigation. More research is needed on the individual cases before one can draw conclusions on how this new sector works. The political economy of the sector is made even more interesting by the fact that the technology is developing faster than the regulation. Yet, our plea to policy-makers is to refrain from legislating too early and to take the time to understand how the supply and the demand of these services behave and their equilibrium.