This section synthesises results of the legal analysis conducted in Chapters 3 and 4 with the empirical findings in the previous two sections to qualify the impact of gaps and barriers in the area of legal migration. Following the econometric analysis, we focus on assessing the impact of gaps and barriers explicitly related to employment and work conditions of TCNs in the EU: access to the labour market, job mobility, re-entry and circular migration, secure residence status, recognition of qualifications and intra-EU mobility (seeTable 12). For this exercise, we draw on the findings presented in the previous section, where we estimated the impact of self-reported restrictions on accessing the labour market and the impact of extending rights of TCNs to those of EU nationals (see Table 13).
Table 12. Gaps and barriers directly related to employment and work conditions of third-country nationals in the EU Gaps and barriers Direct consequences Direct individual
impacts Societal impacts
Work Authorisation - Restricted access to the labour market (‘Entry’ - G2&B2) - Limitations -change employers (G3; B4); also as a consequences of unemployment (G4; B5) Limited employment opportunities
Lower job mobility lower adjustment Lower bargaining power lower wages
Unemployment Overqualification Lower job quality Lower earnings
GDP loss Budget burden
Limitations on re- entry and circular migration (G2&B2; B3) Lower geographic mobility lower adjustment to shocks Fear of unemployment lower bargaining power, acceptance of low-quality jobs Overqualification Lower job quality Lower earnings
GDP loss due to overqualification
Insecure residence
status (G5&G6) Uncertain time horizon in the
destination country underinvestment in country-specific skills Poorer long-term integration outcomes (employment, earnings, social integration) GDP loss Budget burden Negative attitudes toward immigrants Recognition of qualifications (G10 & B8) Employers experience difficulties in recognition of foreign qualifications Unemployment Overqualification Lower earnings GDP loss due to unemployment and overqualification 395 Poeschel (2016).
Difficulty to find a matching job Barriers to intra-EU
mobility (G7) Lower intra-EU mobility of non-EU immigrants
Lower adjustment to economic shocks
Unemployment Foregone earnings (due to lost job opportunities)
GDP loss due to unemployment Productivity loss due to lower knowledge spillovers Lower attractiveness of the EU to foreign workers Source: Authors, 2018.
Table 13. Econometric analysis: summary of findings, individual impact
Outcome Documented differences between
TCNs and mobile EU nationals (conditional on observable characteristics)396
Impact of self-reported gaps and barriers – restricted access to the labour market and barriers to recognition of qualifications – on outcomes of TNCs397
Impact of extending rights: from TCN status to EU national status (for every year since obtaining EU national rights)398
Employment rate Men: -5.2 pp
Women: -13.5 pp Men: Women: - 5.5 pp -10.6 pp Men: - Women: +1.9 pp Monthly pay (decile) Men: -0.7 decile
Women: -0.4 decile Men: u/a Women: u/a Men: +0.1 decile Women: Overqualification Men: +5.5 pp
Women: - Men and women: 21% of overqualified TCNs name recognition as the main obstacle (12% among foreign nationals from the EU)
Men: - Women: - Permanent contract Men: -5.2 pp
Women: -2.5 pp Men: - Women: -12 pp Men: +1.4 pp Women: - Supervisory tasks Men: -4.1 pp
Women: - Men: - Women: - Men: - Women: - Part-time work Men: + 8.3 pp
Women: +2.7 pp Men: - Women: - Men: Women: - 2.3 pp -1.5 pp Atypical work Men: -
Women: - Men: - Women: - Men: - Women: - Perceived discrimination Men: +18.1 pp
Women: +9.3 pp Men: n/a Women: n/a Men: - Women: - Subjective health Men: -
Women: - Men: n/a Women: n/a Men: - Women: - Subjective well-being Men: -
Women: - Men: n/a Women: n/a Men: - Women: - Intra-EU mobility, annual rate On average: -0.4 pp; low- and medium-
skilled non-EU nationals are more constrained.
+0.2-0.6 pp (Poeschel, 2016) Source: Authors own calculations, 2018 based on the results of the econometric analysis; pp: percentage point.
396 Summarises results of the analysis presented in Figures 16, 17 and 19 (see also Annex 5: Tables 28 - 30). 397 Summarises results of the analysis presented in Figure 20 (see also Annex 5: Table 32).
As Table 13 illustrates, legal gaps and barriers have some real implications for TCNs in the EU. For women TCNs, legal restrictions appear to strongly influence their employment rates. This relates to the fact that about 55% of women TCNs come to the EU for family reasons; especially during the first years after arrival, they still might face legal restrictions on accessing the labour market. This increases their likelihood to stay unemployed or to take jobs, which badly match their skills. Legal restrictions in the first years of immigration may in their turn lead to negative long-term implications: long-term unemployment due to scarring effects and eventual dependency on the spouse. Low employment rates among women TCNs further exacerbate gender gaps in activity rates and wages.399
For men TCNs, statistically significant effects of legal restrictions are mainly detected on the intensive margin: monthly pay and quality of jobs. Legal restrictions reduce available employment options for TCNs and thus lead to lower bargaining power and hence lower wages. Unsecure residence status is often associated with employers’ unwillingness to offer permanent contracts and lowers incentives to invest in firm-specific skills by both sides. In line with this, our econometric analysis shows that removing legal restrictions leads to a higher incidence of having a permanent contract and increase in wages.
Employers experience challenges in recognition of qualifications. As Chapter 3 has highlighted, recognition of foreign qualifications remains an important barrier, namely the difficulties and lengthy procedures in particular for the regulated professions. In addition, some of the native employers may also mistrust foreign qualifications, which can lead to discrimination of TCNs at the hiring stage or to wage discrimination of foreign employees. The discrimination (though not necessarily on the grounds of migration status, but also on ethnicity, race, religion, etc.) can partly explain wage and overqualification outcomes. Our findings show that TCNs who are overqualified in their jobs are almost 9 percentage points more likely than mobile EU nationals to name recognition of qualifications as the main reason for this. It is a more structural challenge as MS in the Council of the EU (and not employers) are unwilling to put in place systems to make it easier to recognise foreign qualifications as this clause was debated in the case of Blue Card.400
Our analysis shows that TCNs are less mobile relative to similar EU nationals. This results in individual costs due to foregone job possibilities in other EU Member States and societal costs due to lower adjustment to economic shocks, poorer skill matching and lower knowledge flows. For instance, lower intra-EU mobility is likely to lower attractiveness of the EU as a destination for highly/qualified skilled.401 If this is indeed the case, it will impose a cost of lost opportunities. Several studies found a positive effect of migration on innovation though patenting in destination countries. Kerr & Lincoln use random visa allocations to find causal effects of migration on innovation and growth in the United States.402 They find that admission of highly skilled immigrants leads to an increase in science and engineering employment through contributions from the immigrants themselves.
Hunt & Lioselle reach a similar conclusion; they measured how skilled immigrants increase innovation in the US.403 Using state panel data from 1940-2000, they find that a one percentage point increase in immigrant college graduates’ population share increases patent per capita by 9-18%. Another channel that may exert a positive productivity effect but is harder to measure may arise from the “place of birth” variety among workers. This may generate a greater variety of ideas and increase the variety of goods and services
399 Fachathaler et al. (2018).
400 Interview with the Council of the EU, General Secretariat, 16.02.2018. 401 Delphi method discussion, 9 March, 2018, Brussels.
402 Kerr and Lincoln (2010). 403 Hunt and Lioselle (2010).
supplied locally404 or enhance productivity.405 Bosetti et al., Parrotta et al., Ozgen et al. and Niebuhr find that cultural diversity is one of the main channels to generate new ideas and innovation in Europe.406 Moreover, lower intra-EU mobility of TCNs also decreases their ability to contribute to knowledge flows within the EU. Kaiser et al. and Braunerhjelm et al. conduct firm-level analysis in Denmark and Sweden and show that hiring new knowledge workers increases a firm’s patenting activity.407 Interestingly, the former employers of these workers also increase patenting, which can be explained by reverse knowledge flows. While some Member States may be concerned about inner-EU competition for talented immigrants, Fackler, Giesing & Laurentsyeva show that free labour mobility of skilled workers within the EU in fact can positively affect innovation in both their destination and source countries.408 While mobile skilled workers are no longer inventing in their previous country of residence, they could contribute to cross- border knowledge and technology diffusion and thus help their previous countries of residence to catch up to the technology frontier. See Annex 9 for a brief description of other potential socio-economic impacts.
404 Di Giovanni, Levchenko and Ortega (2015).
405 Ottaviano and Peri (2006); Ortega and Peri (2014); Trax, Brunow and Suedekum (2012). 406 Bosetti et al. (2015); Parrotta et al. (2014); Ozgen et al. (2014); Niebuhr (2010).
407 Kaiser et al. (2015); Braunerhjelm et al. (2015). 408 Fackler, Giesing and Laurentsyeva (2017).