Migration and asylum: The movement of people in the Mediterranean Region - Future scenarios and the EU response. Jean Monnet Occasional Paper No. 11/2014

Introduction. In recent years, the global discussion on migration and asylum has evolved from polarization of perspectives and mistrust, to improving partnerships and fostering cooperation between countries and regions. The paradigm has shifted from control and security exclusively to an increased awareness of the ramifications of migration in development and labour markets, the increasing demographic gap1 and the dangers of exclusion faced by migrant workers (regular or irregular). Eastern Europe will suffer the biggest population decline in the coming years, and Nigeria’s population will reach one billion by 2100. In Europe, the work replacement ratio will be two pensioners for one active worker. It has become clear that these facts cannot be ignored and that there is a need for greater convergence of policies (migration/mobility, fundamental rights, and economic growth), with a migrant-centred approach.2. The assumption that Europe will remain a geopolitical and economic hub that attracts immigrants at all skill levels might not hold water in the long run. The evolving demographic and economic changes have made it evident that the competitiveness of the EU (Europe 2020 Strategy) is also at stake, particularly if an adaptable workforce with the necessary skills is not secured in view of shortfalls in skill levels and because of serious labour mismatches. Therefore, it is the right moment to develop more strategic and long-term migration policies that take into account the evolving position of Europe and its neighbours in the world. By the same token, labour market strategies that meet needs and promote integration of regular migrants are still a pending task for the Member States (MS) in terms of the free movement of people, but also in relation with neighbouring and partner countries.

The simple macroeconomics of North and South in EMU. Bruegel Working Paper 2012/12, 30 July 2012

The euro area today consists of a competitive, moderately leveraged North and an uncompetitive, over-indebted South. Its main macroeconomic challenge is to carry out the adjustment required to restore the competitiveness of its southern part and eliminate its excessive public and private debt burden. This paper investigates the relationship between fiscal and competitiveness adjustment in a stylised model with two countries in a monetary union, North and South. To restore competitiveness, South implements a more restrictive fiscal policy than North. We consider two scenarios. In the first, monetary policy aims at keeping inflation constant in the North. The South therefore needs to deflate to regain competitiveness, which worsens the debt dynamics. In the second, monetary policy aims at keeping inflation constant in the monetary union as a whole. This results in more monetary stimulus, inflation in the North is higher, and this in turn helps the debt dynamics in the South. Our main findings are: •The differential fiscal stance between North and South is what determines real exchange rate changes. South therefore needs to tighten more. There is no escape from relative austerity. •If monetary policy aims at keeping inflation stable in the North and the initial debt is above a certain threshold, debt dynamics are perverse: fiscal retrenchment is self-defeating; •If monetary policy targets average inflation instead, which implies higher inflation in the North, the initial debt threshold above which the debt dynamics become perverse is higher. Accepting more inflation at home is therefore a way for the North to contribute to restoring debt sustainability in the South. •Structural reforms in the South improve the debt dynamics if the initial debt is not too high. Again, targeting average inflation rather than inflation in the North helps strengthen the favourable effects of structural reforms.