effects of labor migration

8/17/2019 Effects of Labor Migration

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WFI-International School of Management

International Economics

Effects of Labor Migration on the

Sending CountryEvidence from Romania

Student: elea !namaria-Ioana

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Matri"elnummer: #$%&$#

able of Contents:

&' Introduction................................................................................3

(' rends in )ermanent migration................................................4

$' Intensity and conse*uences of tem)orary migration..............7

+' Economic Effects of labour migration....................................10

,' Concluding remar"s.................................................................13

#' References.................................................................................15

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&' Introduction

After 1989, when the border barriers had fallen, migration reahes a !ea" in #omania. #omania ra!idl$ beomes a o%ntr$ of net emigration and this fatim!lies se&ere onse'%enes at different le&els( demogra!hi, soial or eonomi. )t is r%ial to !oint o%t that the statistial data on migration a!t%resonl$ the reg%lar emigrants who hange their !ermanent residene. *abo%r migration is hard to '%antif$, altho%gh in the late $ears it beome the mostim!ortant om!onent of #omanian migration.

+igration is %s%all$ defined as the mo&ement of a !erson or gro%! of

!ersons from one geogra!hial %nit to another aross an administrati&e or !olitial border, wishing to settle !ermanentl$ or tem!oraril$ in a !lae other than the !lae of origin. ine the mo&ement between two geogra!hial %nitsdoes not ha&e to o%r diretl$, one f%rther differentiates between the !lae of origin or sending region, transit regions, and the !lae of destination or reei&ingregion. +o&ements within a o%ntr$ are %s%all$ defined as internal migrationand, aordingl$, mo&ements aross international borders are alledinternational migration.

-he obeti&e of the !a!er is to !resent and e/!lain some of the effets of labo%r migration at miroeonomi le&el indi&id%als, families andmaroeonomi le&el in #omania. )n this res!et, we onsider #omania as beinga sending o%ntr$ and one of the im!ortant labo%r reso%res for %ro!ean labo%r mar"et.

-he !a!er is str%t%red as follows. )n the first !art we briefl$ !resent themost rele&ant findings in the researh fo%sed on migration im!ats on sendingo%ntries. -he literat%re on ast %ro!ean o%ntries is affeted b$ the la" of statistial data on labo%r migration in most of the o%ntries.

-o better %nderstand migration and its s!eifiit$ in #omania, in theseond !art there are !resented the most im!ortant trends in !ermanentmigration after 1989. -here were identified fi&e !hases of migration in #omania.-he most signifiant om!onent of #omanian migration is tem!orar$ labo%r migration, !resented in setion fo%r. e !resent in the fo%rth !art the mostim!ortant im!ats of labo%r migration, both !ositi&e and negati&e, at indi&id%aland soial le&el. ome rele&ant onl%sions are drawn in the final !art.

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(' rends in )ermanent migration

-he demogra!hi trends and !o!%lation str%t%ral hanges o%rred after

1989, as onse'%enes of the !olitial and eonomi transition rossed b$#omania, are harateried b$ a se&ere !o!%lation deline.

A derease of !o!%lation n%mber ma$ be the distint or %m%lati&e res%ltof three fators(

• negati&e net e/ternal migration higher than the nat%ral growth

• inrease of death rate and e/eeding the le&el of birth rate

• #eoil of birth rate %nder the le&el of death rate.

All these hanges o%rred in #omania after 1989. )n 1990 and 1991 theemigration was &er$ high and o%tbalaned the moderate nat%ral inrease.tarting with 1992, the nat%ral derease was added to the negati&e e/ternalmigration, as a res%lt of a shar! and dee! dro! in the birth rate and an %!swingin the death rate.

Figure &' Romania' atural gro.th of Romanian )o)ulation and net e/ternal migration0

&11&-(22, 3)ersons4

-he demogra!hi e&ol%tion d%ring the last 10 $ears was infl%ened b$ aom!le/ offators, among whih it has to be mentioned( freedom of o%!les todeide %!on the desiredn%mber and s!aing their hildren, high eonomi andsoial osts s%!!orted b$ !o!%lationd%ring the transition !eriod, the ho%singrisis and the low aess of $o%ng !eo!le to an owndwelling, the hanges in

!o!%lation beha&io%r with res!et to famil$ formation and dissol%tion, the soial%nstableness and %nem!lo$ment. /ternal migration, stim%lated b$ the !olitialfators, has an im!ortant ontrib%tion to !o!%lation deline fig%re 1.

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#omania is s%bsribing to the worldwide migration !henomenon, ha&inga histor$ of migrations mar"ed b$ booms and delines, based mainl$ on internal

!olitial, soial and eonomi onditions. )t is in h%man nat%re to tr$ to find better li&ing onditions, and therefore more de&elo!ed regions are attrating

!eo!le from !oorer !arts of the world. -he !roess of migration in&ol&es as%bet emigrant or immigrant, at least two o%ntries the origin and thedestination o%ntr$, b%t also the transitor$ o%ntries and an intention to getsettled or to find a ob in the destination o%ntr$.

-he #omanian e/ternal migration has two faes( the legal one, statistiall$reorded emigration 6 immigration, and the migration for wor". -he firstom!onent is not &er$ im!ortant as sie( 10 to 15 tho%sands emigrants and a fewtho%sands of immigrants b$ $ear.

ne an notie the high !ro!ortion of emigrants ha&ing %ni&ersit$ le&eled%ation aro%nd 25. -he main destination o%ntries are :erman$, )tal$,;A, and


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• 1990=1993( mass !ermanent emigration of ethni minorities >:erman,

?%ngarian@ !l%s #omanians fleeing !olitial t%rmoil and !o&ert$. -helatter tended to a!!l$ for !olitial as$l%m in the est, !ea"ing at 11.000a!!liations in 1992.

• 1994=199( low le&els of #omanian eonomi migration to estern

%ro!e mainl$ for seasonal or illegal wor"= along with ontin%ed &er$low le&els of ethni migrations and as$l%m=see"ing.

• 199=2001( the de&elo!ment of se&eral !arallel trends and inreases in

emigration, ma"ing this a om!le/ !henomenon to anal$em(a Permanent migration inreasingl$ to the ;A and


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Figure $' 5hases of Romanian migration after &1%1

$' Intensity and conse*uences of tem)orary migration

+igration for em!lo$ment beame the most im!ortant om!onent of #omanian migration d%ring the last $ears. ;nfort%natel$ its desri!tion infig%res is not om!lete and offiial statistis regarding migration for em!lo$ment begin to e/ist onl$ with the $ear 2005. Aording to the #omanianffie for *abo%r Eore +igrationFs estimates 2, there are abo%t 2 million#omanians em!lo$ed abroad in non seasonal ati&ities, whih re!resents morethan 10 of #omaniaFs inhabitants.

)n this st%d$ we %se data from *i&ing Abroad n A -em!orar$ Gasis, -heonomi +igration f #omanians( 1990=200, ond%ted b$ !en oiet$Eo%ndation E and whih is re!resentati&e at national le&el. -he sam!le of 1,400 !eo!le %sed for data gathering at national le&el was designed based on a

!robabilisti, two stage !attern, with stratifiation in the first stage. -he %nit of seletion in the first stage was the &oting station, and in the seond stage, the

!erson to inter&iew.

Aording to E, more than one third of the ho%seholds had at least onemigrant for em!lo$ment in the !eriod mentioned abo&e.

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Figure +' Romania' 5ersons tem)orary living abroad )er &222 inhabitants

Socio- demogra)hic effects of labour migration

Erom a demogra!hi !ers!eti&e, the onse'%enes of migration are &er$im!ortant. -he tenden$ of definitel$ remaining in the destination o%ntries iswell installed and that in&ol&es a !ermanent h%man loss, whih in the long r%n isaffeting eonomi growth of the o%ntr$. ?%man fator is the most im!ortantso%re of eonomi growth, growth rates are e/!eted to be lower than in aseof remaining at home and ontrib%ting to the &al%e !rod%tion in thenati&e o%ntr$.

)nternational mobilit$ is bigger among !ersons ha&ing the a!!ro!riate ageto wor" as a onse'%ene, emigration o%ntries fae an aelerated

demogra!hi aging !roess of their !o!%lation, whih is %rrentl$ ademogra!hi !henomenon !resent in #omania.

-hose who emigrate are $o%ng !eo!le and their share is onstantl$inreasing, so that we an arg%e that emigration affets age gro%!s with highs!eifi fertilit$ rates th%s it an red%e the !otential of newl$ born in #omania,mostl$ if the emigration beomes !ermanent.

-he emigration str%t%re b$ gender re&eals some hanges, migrant women beome more n%mero%s in the last $ears, in 2004, 2 of the migrants beingwomen and the age gro%! 2= 40 $ears ao%nts for 58 of the migrant

!o!%lation. -here is an inreasing tenden$ in these fig%res and therefore in2008 5 of emigrants were women. -he effets on birth rate and ertilit$ arestarting to be notied sine a large n%mber of hildren are born o%tside theo%ntr$.

-he labo%r migration effets at famil$ le&els are m%lti!le, both !ositi&eand negati&e. +one$ sent b$ emigrants to their families is inreasing their '%alit$ of life and has !ositi&e effets on the famil$ relations.

Geside this, families s%ffer for loosing one or more members on atem!orar$ basis. )n fat, the longer the time of de!art%re is, the more signifiantthe effets on the famil$ are. -he de!art%re of one of the members determines

reorganiation of the roles within the famil$. )n that ase, the remaining

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members of the families ta"e o&er the rolesDf%ntions of those migrated for em!lo$ment whih it an affet the well being of the famil$ or of the o%!lerelationshi!. -his o%ld lead to famil$ disbandment di&ores.

ne of the most im!ortant negati&e effets of the labo%r migration seemsto be in relation with the migrantsF hildren whih remain, in the ha!!iestases with %st one of their !arents. G%t there are lots of ases when both of the

!arents migrate for em!lo$ment abroad and therefore the grand!arents or other relati&es, e&en friends or neighbo%rs are for their hildren. ometimes, themigrants abandon their hildren whih end %! in the stateFs are. o, hildren areaffeted in ertain e/tent and some of them tra%matied b$ their !arentslea&ing as the !ersons res!onsible for their well being annot f%lfill the !arentalroles. Also, the elderl$ or other de!endent !ersons o%ld be affeted b$ themigrantsF lea&ing, es!eiall$ within omm%nities with high le&el of migration.

)n some ases, hildren are lea&ing the o%ntr$ along with their !arents.-he$ ha&e to !ass an aommodation !eriod, to learn a new lang%age and to li&ein a different soial en&ironment. -his is stressf%l for them. Aording to thementioned st%d$, *i&ing Abroad n A -em!orar$ Gasis -he onomi+igration f #omanians( 1990=200, most of the indi&id%als in ho%seholdswith members who ha&e been gone abroad do not feel an$ hange related to thehildren or famil$ relations.

e anal$ed the &ariable -he fat that someone in $o%r ho%sehold has been abroad for a while, has bro%ght for $o% hanges in hildren and wefo%nd that onl$ 11 from the res!ondents laimed that the$ ha&e !roblems inrelation with their hildren in this res!et.

Figure ,' he im)act of living abroad on the relationshi) .ith children

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?owe&er, there are differenes between the &ario%s ategories of res!ondents. -h%s, we notie that the indi&id%als with wor" e/!eriene abroadstate, in a higher !erentage than the others, that the e/!eriene abroadgenerated ertain hanges with res!et to famil$ relations and hildren. Eig 5

e onsider that migrants tend to thin" that the foreign e/!eriene has a !ositi&e infl%ene on famil$ relations and on the %nderstanding with the life !artner, as the mone$ earned from wor"ing abroad ontrib%tes to anim!ro&ement in the '%alit$ of life, in the migrant ho%seholds, and im!liitl$ toan im!ro&ement in the relations within the famil$. -he$ are not aware b$ theim!ats on their hildrenFs !ersonal life and the$ are negleting theonse'%enes on their f%t%re de&elo!ment.

+' Economic Effects of labour migration

Erom the !oint of &iew of o%r !a!er, it is it is rele&ant to e/!lain to whate/tent migrants ma$ benefit from their tem!orar$ sta$ abroad. -here iswides!read onsens%s that tem!orar$ migration ma$ ontrib%te to higher s"illd%e to the higher le&el of tehnologial de&elo!ment in the new wor"!lae.

-herefore, we aim to &erif$ the h$!othesis if tem!orar$ migration abroadhas a signifiant infl%ene on the inome of the !erson who wor"ed abroad,om!ared to those who did not ha&e migration e/!eriene.

e onsider inome as being the de!endent &ariable and selet se&eral&ariables as e/!lanator$ &ariable( wor" e/!eriene, ed%ation, om!%ter s"ills,

foreign lang%ages "nowledge and wor"ing abroad e/!eriene. e r%n a m%lti=llinear regression on *- database, with 1032 indi&id%als with or witho%ttem!orar$ migration e/!eriene d%ring 1990= 200. -able 1 shows the res%lts of the linear regression anal$sis, with inome le&el as de!endent &ariable, %sed b$logarithmation in the regression !attern. All oeffiients mar"ed with bold aresignifiantl$ different from ero for ! H 0.05. -he final !attern was obtainedthro%gh the Bba"ward eliminationC method. Ad%sted #2 is 0.33 and thereforethe seleted fators e/!lain 33. from the &ariabilit$ of indi&id%al inome.

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able &' Results from the regression model on income 3n6&2$(4

?owe&er, anal$ing the relations between se&eral fators that o%ld affet theindi&id%al inome, the regression anal$sis shows that(

• the wor" e/!eriene abroad !ositi&el$ affets the inome. Persons with a

wor" e/!eriene abroad ha&e a higher inome after their ret%rning to#omania.

• as it was e/!eted, the main fator that diretl$ affets the inome is the

ed%ation. A high n%mber of shool $ears determine a larger inome.

• )nome is also !ositi&el$ affeted b$ om!%ter s"ills and wor"

e/!eriene.

•e also ontrol for the "nowledge of foreign lang%ages and this fator was not signifiant and was e/l%ded from the model.

-he diret im!at of the migration abroad an be easil$ Bo%ntedC b$anal$ing the in&estments made with the mone$ earned from wor"ing abroad.-he anal$sis of the in&estments also allows %s to obser&e to what e/tent theho%seholds in&est this mone$ in ati&ities that !rod%e inome or, on theontrar$, %st in d%rables that do not !rod%e inome.

-he national data show that, in the last fi&e $ears, a signifiant !art of the

#omanians in&ested in d%rables( 50 of the #omanians bo%ght ho%seholda!!lianes, 37 e/!anded Dmodernied their home, and 1 bo%ght ars, et.?owe&er, regardless of the goods !%rhased, abo%t 10 of the in&estments weremade with the hel! of the inomes from migration. )f we narrow the anal$sis to

%st the indi&id%als who !%rhased goods with mone$ from the migrationabroad, we notie that more than 50 of them in&ested ine/!andingDmoderniing their home, and that the same !erentage also in&estedin !%rhasing ho%sehold a!!lianes. A signifiant !erentage abo%t 21re!resents the ho%seholds that, in the last fi&e $ears, s!ent mone$ frommigration in order to !%rhase one or se&eral ars.

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-he wor" migration and the entre!rene%rshi! are life strategies tightl$interonneted. or" e/!eriene abroad !ositi&el$ assoiates both withentre!rene%rial beha&io%r, and with the intentions to de&elo! a b%siness. As themigrant a%m%lates finanial, h%man and relational a!ital abroad and satisfies

hisDher basi needs, heDshe tends to in&est this a!ital in !rod%ti&e ati&ities, beoming an entre!rene%r on hisDher own. Eor an im!ortant !art of the#omanian migrants, wor"ing abroad re!resents an intermediate strateg$ before

!%tting into !ratie the entre!rene%rial strateg$, fat re&ealed b$ the strongonnetion between the wor" e/!eriene abroad and the entre!rene%rialorientation, both on a beha&io%r le&el, and on an intentional le&el.

-he e/ternal migration a%ses di&ers effets at maroeonomi le&el. -hemost im!ortant im!ats are onneted with se&ere dise'%ilibri%m andd$sf%ntions on the labo%r mar"et, s%h as(

•

the !otential em!lo$ment a!ait$ of the labo%r fore• the rate and the harateristis of %nem!lo$ment

• the emigration of high '%alified labo%r fore the loss of BbrainsC,

a!able of reating a high added &al%e

• wage distortions and the segmentation of the labo%r fore an

inreased Bshadow or informal eonom$C

• a diminished loal labo%r fore %se immigrants in order to om!lete

the la" of loal labo%r fore.

Geside these negati&e as!ets, migration has !ositi&e onse'%enes on sendingo%ntries eonomies. -he most !ositi&e short=term im!at is dereasing%nem!lo$ment, as it an be e/!eriened in all large sending o%ntries s%h as#omania, b%t also Poland, lo&a"ia, G%lgaria. )f migration inl%des mainl$otherwise %nem!lo$ed !eo!le, also the b%dgetar$ im!ats are !ositi&e less%nem!lo$ment benefit to be !aid. +oreo&er, neither the fa&o%rable soio=

!olitial im!at sho%ld be ignored, sine high %nem!lo$ment is generall$aom!anied b$ higher soial tensions and, as a onse'%ene, b$ higher

b%dgetar$ e/!endit%re on soial stabilit$ !arti%larl$ in regions with &er$ high

share of %nem!lo$ed !eo!le. +igration red%ed reform !ress%re on #omaniango&ernment. Eor some areasDregions, migration for em!lo$ment abroad releasethe !ress%re from the loal labo%r mar"ets, as well as the !ress%re from thesoial assistane shemas with res!et to migrants whih are their !otential

benefiiaries. Eor other areasDregions, migration for a better em!lo$ment !rod%e labo%r fore shortage and affets the !otential of loal eonomi andsoial de&elo!ment. )n fat, the highest labo%r fore shortage is dis!la$ed b$those #omanian regions whih dis!la$ high migration flows.

ne !ositi&e effet of migration is the remittanes, with strongim!liations at maro eonomi at miroeonomi le&el. -he estimates of the

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Iational Gan" of #omania regarding wor"ersF remittanes e'%aled 1753.5million ; J in 2004 and 4440.9 million ; J in 2005 4, whih ao%nts for 4.51 of the 2005 #omaniaFs :KP. #emittanesF effets at maroeonomile&el are rather diffi%lt to a!t%re bea%se of their ation on a large n%mber of

maroeonomi &ariables. -he most &isible and immediate im!at of remittanes is on the ho%seholdsF ons%m!tion, im!ortant at maroeonomile&el as being !art of the aggregate domesti demand, om!onent of the :KP.G%t remittanes also affet in&estments and sa&ings. #emittanes reei&ed b$ho%seholds diretl$ inrease their dis!osable inome hene inreaseons%m!tion whih leads to tem!orar$ !o&ert$ red%tion. -he$ an also red%eine'%alities thro%gh their distrib%tional effets.

,' Concluding remar"s

-he f%t%re of #omanian e/ternal migration is !artiall$ "nown onl$.estern o%ntries need now foreign labo%r fore for eonomi reason. G%t somewestern o%ntries start faing a small nat%ral derease of !o!%lation.)mmigration o&ers this nat%ral derease and the n%mber of !o!%lation is notdelining. ther western o%ntries will ha&e nat%ral derease d%ring the ne/t$ears. -o a&oid !o!%lation deline, the western o%ntries will inrease theimmigration le&el and the reser&oir of this migration will be the easterno%ntries inl%ding #omania and not the o%th, as d%ring the !ost=war eonomi boom.

-here are im!ortant eonomi onse'%enes of this mo&ement. )n the !a!er we anal$e the demogra!hi onse'%enes, sine ategor$ that emigratedfor eonomi reasons in the last $ears is om!osed of $o%ngsters. -here wereidentified im!ortant eonomi onse'%enes on finanial as!ets and life '%alit$of #omanians, sine the &ol%me of remittanes was abo%t 7 billion %ros in2007. -here is also a soial im!at !arti%larl$ on the li&es of migrant families.-he most !roblemati iss%e is the tem!orar$ abandonment of minors b$ their labo%r migrant !arents, and that fored a%thorities to form%late !oliies to

monitor the sit%ation.-he #omanian e/ternal migration will be infl%ened in the f%t%re b$ how

strong and stable will be the national eonomi growth to what e/tent thisgrowth will raise signifiantl$ the standard of li&ing, and the immigration

!oliies of western o%ntries. Aording to the most o!timisti fig%res, after ase&ere deline d%ring 2009, a%sed b$ the effets of finanial risis in #omania,the first signs of reo&er$ was notied in 2010. -he migration !henomenon isinfl%ened b$ the eonomi e&ol%tion and o!en new !ossibilities for f%rther anal$sis.

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#' References

1. Ge"er, :., ?%man Geha&ior, An eonomi a!!roah, All P%blishing

?o%se,G%harest, 1994

2. Garro, #. L., M. ala=i=+artin. onomi :rowth. Iew Nor"(+a:raw=?ill, 1995

3. Glanhard, . and *. Oat. B#egional e&ol%tionsC, Groo"ings Pa!ers ononomiAti&it$ 1, 1=1. 1992.

4. Ga%er, -., and O. E. immermann. B

effects of labor migration

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