Interrelated dynamics of labor markets and migration in Romanian society

Dumitru Sandu
University of Bucharest

‐ Draft1 for the paper, December 2010 –

Questions
What is the relation between labor markets and different forms of migration in a society of
cumulative transitions? The formulation and the answers for that question are specified for the
case of post-89 Romanian society. Post-communist transition after 1989, the pre-integration
processes before 2007 and transition associated with the integration in European Union
cumulate in a complex web. Understanding the interactions between labor markets and
migration in the context of such processes is a challenge not only due to the complexities of
cumulative transitions but also as a result of the fact that migration streams are different in their
internal and external forms. The paper addresses only two particular topics from this complex
web referring a) to the role of labor supply on work emigration abroad and b) to the impact of
work emigration abroad on local labor markets. The number of jobs for salaried people declined
continuously after 1989 in Romania up to 2004 (Table 1). Its negative peak was reached in
Romania during the national depression period of 1997-1999. In what direction, for what
migration stream was mainly directed the echo of that decline? Emigration created a deficit of
labor? Are these interactions more visible at local or at regional level? These are the main
question for the exploration developed by this paper.

The macro picture

The number of employees declined from about seven millions in 1992 to about five millions in
2008 according to National Institute of Statistics figures. At the end of this interval they still
represent more than two thirds in civil employment (employees, employers, self-employed and
family workers). The key turning points in the dynamics of labor did not match the stages of
external migration of permanent or temporary nature: the significant increase in temporary
emigration from 2002 onwards is accompanied by a slowdown of employment decline (Table 1).
The key effect in sharp decline of employment in the period 1997-1999 was especially reflected
in the dynamics of internal migration. It is in the same period that total internal migration had the
sharpest decline. It is the year 1997 when the structure of internal migration supported a basic
change by the prevalence of urban to rural migration versus the former long term trend of
prevalence in rural to urban migration. Return migration from cities to villages was a reaction to
urban unemployment and higher costs of level of living in the cities compared to communes.

The number of employees started to increase in the interval 2005- 2008 but neither internal
migration nor emigration had significant variations connected to the economic trend. As far as it
concerns the reverse influence, from migration to employment, the empirical evidence is also
absent at this level of analysis. The period of increase in total migration and emigration after
2005 is not accompanied by significant change in employment. Does this mean that migration

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dynamics does not count for labor markets? It is likely that if one changes the level of analysis
at community level and one keeps under control other factors, the relations of interest could get
a higher profile.

Table 1. Dynamics of migration and labor, Romania 1994-2008

labor* internal migration* emigration remittances***

annual increase  annual  annual  annual increase in  
of average  increase of  increase of in‐ rate of  annual  inflow of  the inflow of 
number of  total internal  migrants in  urban net  temporary  increase of  remitances  remitances 
employees migration urban areas migration emigration** emigration* (milon USD) (million USD)
1994 ‐233316 34050 2.6 11
1995 ‐264970 22746 ‐1663 13647 3.1 8529 9 ‐2
1996 ‐234748 3388 4293 4808 6.3 ‐4149 18 9
1997 ‐341627 9700 ‐7940 ‐10940 3.1 ‐1581 16 ‐2
1998 ‐228352 ‐26425 ‐12891 ‐16717 2.9 ‐2409 49 33
1999 ‐608148 ‐455 ‐1178 ‐25324 4.9 ‐4942 96 47
2000 ‐137499 ‐31192 ‐26016 ‐33296 7.4 2159 96 0
2001 ‐4038 39825 42644 ‐8539 6.0 ‐4832 116 20
2002 ‐51168 36487 7408 ‐23278 9.4 ‐1767 143 27
2003 23056 10928 13273 ‐21461 15.4 2519 124 ‐19
2004 ‐122039 38145 1684 ‐38458 21.4 2409 132 8
2005 90073 ‐97288 ‐39632 ‐20524 28.0 ‐2144 4733 4601
2006 108344 61421 39278 ‐18629 24.6 3259 6718 1985
2007 218065 40131 ‐519 ‐38002 ‐5367 8542 1824
2008 160998 15098 10282 ‐46157 ‐91 9381 839
Data sources: * National Institute of Statistics (NIS), Locality Data Basis (LDB), ** D.Sandu 20061. World
Bank staff estimates based on the International Monetary Fund's Balance of Payments Statistics
Yearbook 2008.

Communa level

Temporary emigration, the key dependent variable in the analysis, was recorded in la last 2002
census for all the localities of the country by asking about the persons in the household that
were abroad by less than one year. The average rate per locality was of about nine temporary
emigrants per one thousands inhabitants. The figure underestimates the intensity of emigration
by not including also the persons that left locality for living abroad by more than one year. The
dynamics of the local employment is measured by the ratio between the rate of salaried people
in commune (as basis rural administrative unit) at the two last censuses. The advantage of
these measures is that they refer to the number of salaried people in locality irrespective of the
locality where they work .

A set of three hypotheses are formulated on the basis of existing partial empirical information:

• The first hypothesis (H1- higher employment hypothesis) supports the idea that higher
employment at the beginning of the period and its increase during the period bring a
                                                            
1
 Sandu, D. 2006. Lumile sociale ale migratiei romanesti in strainatate. Iasi : POLIROM, p.186.
 

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 lower temporary emigration. A higher supply of local jobs could be a disfavoring factor
for work emigration.
• The second hypothesis (H2 – high emigration hypothesis) stipulates the impact of higher
temporary emigration to reduce the out-migration rates and to increase the local
employment.
• A third hypothesis (H3 local development level hypothesis) is based on the results of
previous analysis2 indicating a positive effect of local development on emigration.
Communes that are more developed are expected to have higher rates of emigration
due to the superior resources their population have for emigration.

Table 2.Descriptives for the variables in path analysis from figure 1

Std.
Minimum Maximum Mean Deviation
salaried people to 1000 inhabitants, 53.8 700.8 234.0 74.8
1992, census*
rate of salaried people 2002 *100/rate of 10.0 180.7 66.3 16.7
salaried people in 1992, censuses*
average age of adult population 1996* 36.0 60.9 46.8 3.5
distance from commune to the nearest 1.1 4.9 3.4 .7
town, km (ln transformation)
index of commune development, 1992- -33.6 34.2 -.2 9.9
3
1996 data, factor score multiplied by 10

out-migration rate 1994-2001*

0 316.7 113 34.9
Temporary emigration rate recorded in .0 232.8 7.6 14.8
2002 census*
Data sources:*NIS

The two control variables in the model refer to mean age of the population at the mid of the
reference period and the distance between commune and the nearest city.

The path model fully supports the three hypotheses. Higher temporary emigration is not only an
effect of lower employment at the beginning of the period or of its decrease over time but it is
also a factor contributing to increase the local employment by its contribution to reduce the
unemployment. The effects of temporary emigration reach also the internal migration:
communes of high emigration rate records low out-migration.

High temporary emigration is not only an effect of low labor market opportunities and high
resources of community capital. It is also a significant factor in the local dynamics. It
contributes to reducing the out-migration.

                                                            
2
 Sandu, D. 2005. Emerging Transnational Migration from he Romanian Villages. Current Sociology, 4. p 
3
 Sandu, D. 1999. Spatiul social al tranztiei. Iasi: POLIROM, p.186. The index includes indicators referring
to education stock, employees, agricultural population, infrastructure and demographic indicators related
to quality of life (infant mortality, out-migration, fertility). 

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 A pa ath model in n AMOS.
Com mputations o on 2623
communes using
censsus data fro om 1992
and 2002 and ffrom vital
statistics provided for
different years in the
interrcensus period. For
the definition o fthe
ables see T
varia Table 2.
The model hass a good
fit tto the da ata with
TLI==0.955 , CFI=0.992
and RMSEA=0.053. All
the p path coefficients are
significant for p=
=0.01.

 
Figure 1.Ro
omanian migra
ation in the lab
bor market dy
ynamics at com
mmune level, 1992-2002

A focus on the two o migration variables re eferring to te

emporary e emigration a and out-migrration
(Table 3) bring more lights on their dynam mics. Regionnal variation
n of tempora ary emigration is
practicallly insignifica
ant if one co
ontrols for the developmment profile oof localities and their cu
ultural
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composittion (as give en by the shhare of relig gious minor ities ). The
e situation iss contrasting
g with
out- miggration tha at tends to have syste ematically hhigher valuees for the communes from
Transilva
ania historica al region com
mpard to the e South regiions of Munttenia and Do obrogea.

                                                            
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 This is a vvariable that is relevant not o
only for religiou
us diversity bu t also for the sshare of ethnicc minorities and 
network caapital of the po opulation). 

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A second important difference between the two forms of migration is that temporary emigration
is higher for the communes that are close to the cities and out-migration is specific for remore
communes. Religious minorities people that are rich in network capital are more inclined to
emigrate than to move within the country.

Table 3. Predictors of temporary emigration and of net migration rate

Dependent variable
Out-migration rate
Temporary emigration 1994-2001 (ln
rate , 2001 transformation)
Significance Significance
b level (p) b level (p)
salaried people to 1000 inhabitants,
‐0,062 0,010 0,001  0,001
1992
rate of salaried people 2002 *100/rate
0,085 0,095 0,000  0,802
of salaried people in 1992
average age of adult population 1996 ‐1,143 0,015 ‐0,001  0,865
distance from commune to the nearest
‐1,695 0,011 0,051  0,001
town, km (ln transformation)
index of commune development 0,193 0,003 ‐0,022  0,000
% of religious minorities in commune
1,703 0,000 ‐0,020  0,000
(square root), 1992
Moldova* 2,371 0,377 0,085  0,126
Transilvania* ‐2,253 0,239 0,216  0,000
West regions 0,079 0,974 0,116  0,064
Oltenia* 0,946 0,386 0,094  0,063
Constante
71,198 0,011 4,321  0,000
R2 0.23 0.45
N 2625 2624

OLS regression models run in STATA, controlling for the similarity of the communes from
the same county by cluster specification cluster(county). Significance level is indicated in a
conventional way as the computations cover almost all the communes (2652 in the first
model and 2618 in the second model out of the total 2680 communes existing in 2002).
Syntax of the command : regress remigtem rsalar92 salar029 tvm96 lnkm devcom3
minrelig moldova centvest oltenia , cluster(jud)
*Dummy regional variables having Muntenia and Dobrogea as reference category.

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