Course name: Development Economics

Course Code: ECON2404

Term Paper
On
Global Labor Migration Crisis
Submitted to: Submitted by:
Md. Naimur Rahman Name : Shundhi Shanai Bhuiyan
Lecturer Roll : 18141104
Department of Economics Session : 2018-19
Faculty of Arts and Social Sciences Department of Economics, FASS
Bangladesh University of Professionals
 Table of Contents

Topic Page
Abstract 3
Introduction 4
Methodology and Data 5
International migration and global, financial and 6
economic crisis
Migration policies during economic downturn 7
and recovery
Economic benefits of international migration 8
Correlation between the development of net 8
migration, GDP growth and unemployment
Pitfalls and future challenges in migration 10
Conclusions 11
References 12
 Abstract
Global labor migration is driven mainly by economic interests. This paper focuses on the pre-
and post-economic crisis era and brings together important facts about labor migration
motivation and offers examples on the macroeconomic level of its causes and impacts. The
economic rationale why migration is so severely restricted is the core of migration policies.
While the correlation between the crude rate of net migration and the GDP per capita is very low,
the existence of correlation between the crude rate of net migration and the unemployment rate is
evident in the most of analyzed countries. Statistical insignificance of correlation indices in some
countries can be then attributed to structural problems of those economies.
Introduction

While migration is one of a globalized society's accompanying phenomenon, economic analyzes

do not pay enough attention to this highly topical issue, which has implications for individual
economic topics and also large macroeconomic consequences. This paper summarizes relevant
facts about labor migration and offers examples of their macro-and micro-economic impacts.
Within the European Union, independence is fostered by freedom of movement for every
resident, whereas there are limits on individuals wishing to immigrate or seeking asylum from
outside the European Union. In the 1930's, there was the deepest recession since the international
financial and economic crisis. Some of the consequences of this migration crisis are only
temporary and an they fade away, migration flows will again be driven by "normal" structural
determinants such as changes in the labor market, demographic dynamics in receiving and
sending countries, and significant trends in the global economy. But the experience gained from
the Great Depression and other crises in the past also shows that some short-term effects and
strategies that were originally applied can then continue for years, even if the crisis is over.
Nowadays, problems such as rising migration flows of low-income and skilled migrants and
rising unemployment among young migrants may have much longer and deeper consequences
for labor markets and the economy as a whole than most economists expected when the crisis
peaked and most European economies began to recover. Migration policies ' reaction to these
circumstances can then help to solve the problems that result from the last global crisis, but it can
also make them worse. This paper discusses some of the challenges and problems posed by the
economic crisis and propose possible solutions to these problems.

This paper concentrates on the pre-and post-economic crisis, and compiles important facts about
the incentive to move work and discusses their macroeconomic effects. The goal is to classify the
causes and effects of international migration flows on labor markets based on modern theoretical
postulates through advanced statistical tools like economic verification and expansion of the
findings of the theory of migration. The empirical findings were based on fundamental results of
migration theory, including validation of the statistical value of certain parameters and the
economic confirmation conditions of the system. The functional part of the report is partly
concerned with the evaluation through appropriate quantitative methods of relations between the
migratory frequency and the selected economic indicators in the European Union. Central
European States: Czech Republic, Hungary, Poland, Slovakia and Slovenia are included in the
selected list of countries. All of these were post-
communist countries which had some problems of change in common but which had also
experienced significant changes in their economic development. Regression methods and
correlation analysis, including the statistical significance check, were used to evaluate regression
function parameters. In this paper, hypotheses regarding the possible associations between net
migration, per capita GDP and unemployment will be tested.

Methodology and Data

For empirical data analysis, sufficient statistical and econometric approaches are used. A critical
analysis of theoretical concepts will be made. An evaluation will be carried out based on
statistically significant use and coherence of certain criteria and on meeting requirements for
economic validation of presented models, on the potential existence of relations of migration and
other macroeconomic characteristics. Let me first comment briefly on the available information.
Global migration representative information is scarce. Global migration takes place when
someone travels from one specific country to another, as the geographical dimension is quite
obvious. There is much less evidence of the temporal dimension. The foreign migrant is not
everyone who crosses the border (UN 1998). A person's stay in another country may be a useful
criterion in distinguishing between illegal migrants and other border crossings. This is not,
however, an absolute criterion, as some visitors remain in a country longer than some foreign
seasonal workers or asylum seekers, for example. However, academics and policy makers
primarily apply the criteria to accept a foreign migrant who wants to stay longer than one year in
another country. In this document, as the data are given by each country, no description of a
migrant is presented. There are much incoherence between data received and sending by
countries with regard to the same migration flow (Willekens, 1994). If the data were not released
for one or two years of the reference period by some of the countries, the reference period may
be shorter than that. The decision followed on using methods that are appropriate for determining
ties between the crudest migration rate and the unemployment rate was a matter of obtaining
information on the character of data. For the analysis of data defined by EUROSTAT, statistical
methods were used. The data for the raw rate of migration plus adjustment indicator comes from
the EUROSTAT (2011) source and is defined as a net migration plus year adjustment ratio for
the 1000-inhabitant average in that year. The net migration varies from the overall change to the
natural population change. The unemployment rate indicator values are also extracted from the
EUROSTAT results.
The use of statistical methods has been defined by Aczel (1989) or Mason, Lind (1990). The
analysis of factual data is based on the methods reported by Hindls et al. (2003), Dirschedl,
Ostermann (2001) and Palát (2010). Minařík (1996, p. 97) notes that the numerical dependency
of two characteristics (numeric figures) can be represented as a functional relationship by
equation, table or map. We identify two forms of statistical dependence: set, functional aliases of
deterministic dependence and free, statistical aliases of stochastic dependence. The Stochastic
Dependence seemed like a tendency, more or less, to replicate in different ways on the different
spots and periods. It is defined by its heterogeneity of each cause and is felt under a series of
noticeable factors that react differently. The stochastic dependency is defined as a reliance on
correlation. We differentiate between dependent and independent variable for this dependence. A
pair analysis or a basic analysis is called the correlation analysis of two variables.

In this paper, the basic characteristics of the dependency of variables are determined. Conjugate
regression lines show the same values of the intensity dependence characteristics, the correlation
coefficient ryx= rxy, the coefficient of determination r2yx= r2xy (in this list, the parameter
thought to be dependent is mentioned first). The Iyx correlation index is a dependency tightness
feature for any form of regression function (for both simple and multiple factor dependences).

International migration and global, financial and economic crisis:

The international economic and financial crises led to the most profound recession since the
Great Depression. Many impacts of the crisis on migration are transient and the migrant flows
fade away, and the "ordinary" structural determinants, including labor market changes, the
population model structure in receiving and sending countries and big patterns in the global
economy, are again affected by migration flows. But the experience gained from the Great
Depression and other crises in the past also shows that certain impacts and policies initially
introduced in a short term that continue for years, even if the crisis has already ended.
Migration policies during economic downturn and recovery
During the economic downturn, labor demand is weakening, which can result in policies that
recommend increasing new immigration to the country. Up to now it's fine. Nevertheless, rising

Unemployment is growing anti-immigration moods in society, which could lead to populist

responses and unfair restrictions on migration that do not share a coherent economic policy on
immigration and could damage the country's capacity to achieve long-term sustainable growth.
In addition, strategies for laid-off or persuading migrant workers to return to their countries of
origin to make room for local workers are not inherently cost-effective. In spring 2009, in the
Czech Republic an attempt was made in this direction. Due to a decreasing demand for free air
flights during the crisis and a donation of EUR 500 in cash, the Czech Government offered
foreign workers their jobs. This has provided an opportunity for people from very poor countries
in particular, for example. The money-short of Mongolia, Vietnam etc. could become a tool for
exploitation and end up in illegal networks. There are also certainly social aspects in the plan, but
the question of human mobility has not been addressed over a longer term. Until introducing
these measures, there are several questions that should be asked. Does the availability of
indigenous workers deliver the same skills as migrant workers who have returned home? The
cliché that migrants are uneducated is common in society, but the fact is that migrants carry
human capital. The overwhelming majority of them has expertise, a high level of education and
human capital and contributes significantly to their economies. Migrant workers have a better
profile than local-born workers in many countries. Yet, when many migrants are much better
qualified than the recipient population yet Europe desperately needs skills from both developed
and developing countries, there is no permanent way to convince migrants to return to their
countries of origin. Restrictions on the inflows of immigrants from certain countries may then
prompt some reproach measures by sending countries that could not only affect jobs but also
trade in goods or investments and such protectionist measures might even cause more damage
than the immigration restrictions themselves. And not only is it feasible for indigenous workers
to do the jobs but also is it likely that they are willing to take on these jobs and under what
conditions of pay, since migrants are payed less than indigenous workers. Several theories can be
found in the dual employment theory that people in developed societies have reasons for low
levels of employment because they have no prestige and very few upward mobility networks.
Such an employment shortage then creates demand for foreign workers who have no such
psychological issues. Unfair immigration restrictions and efforts to force migrant workers to
return to their home country in order to make room for indigenous jobs are not necessarily
related to better prospects for the labor market of local workers.

Economic benefits of international migration:

The economic benefits of global migration have been significantly confirmed by Hamilton and
Whaley (20084), and Rodrik (2003), as well as many other reports. The free flow of labor
contributes to the redeployment of more productive staff. We do not, however, usually take
account in these labor movements of all economic and social costs. Immigrants without their
families decrease the social pressure of the economy. Nevertheless, it is important to note that
the value of the tax expenditures of aging population is not manageable by immigration. The
reasoning is in accordance with local family traditions and therefore the immigrant birth rate falls
to the local population's birth rate.

Correlation between the development of net migration, GDP growth and

unemployment

The crude rate change of net migration plus is known as the net migration plus year to year
adjustment ratio, expressed as 1 000 inhabitants, to the average population that year. The net
migration distinguishes the total change from the natural population change. For this study, the
GDP variable chosen is true GDP per person, which is computed as a percentage change in
relation to the previous period. The European Statistical Office (EUROSTAT) publishes all
measurements. For the aim of a more in-depth analysis, the data available from EUROSTAT are
used. The period 1996–2010 has been set as the reference era. I will try to prove statistically that
there is a connection between the raw rate of net migration and real GDP per capita. Methods of
regression and correlation analysis (including statistical significance testing) mentioned in the
Methods section were used to determine the parameters of the regression function. Linear,
quadratic and cubic regression parameters for this analysis in the reference time are described in
Tab. I.
All measured European and in particular countries in Tab correlation indices. I'm very weak and
none of them is statistically significant. Such findings can lead to the presumption that migration
decisions are not strongly dependent on real GDP per capita in the receiving country. In the next
section, I shall try to prove statistically the existence of a connection between the crude rate of
net migration and the unemployment rate, where dependency is supposed to be higher because
unemployment and lack of job opportunities are some of the driving factors that can drive
migration decisions according to economic theory. The period 2000–2010 was established as the
reference period because of the availability of information on EUROSTAT. For that analysis in
the specified reference time the parameters for the linear, quadratic and cubic regression

functions are described in section. II. Correlation indices for specific types of a regression
function have been determined. Although there are very small measured correlation indices for
unemployment to migration in Europe, the differences between certain examined countries are
large.
Pitfalls and future challenges in migration:
First of all, it may be argued that human migration has always existed in human history, but is
increasing, because it is part of globalization's cross-border flows. And that also means
considering the needs and interests of sending communities, whether they remain on for security,
because mobility of people may of course become a question of security, and ensuring that
migration does not really lead to underdevelopment, as it does to others but helps to grow. There
are of course many challenges in migration patterns. Migration policies often fail or have
unintended consequences because of

 Lack of knowledge of future trends

 Short term focus of policy and research
 Poor understanding of the forces driving international migration
Conclusions
The history from the Great Depression and other recession in the past shows that certain short-
term consequences and strategies can then continue for years, even though the crisis is over.
Problems such as the increasing flow of migrants with low incomes and qualified qualifications
or the growing unemployment of young migrants today may have far more significant and long-
ranging consequences for labor markets and economies as many analysts at the time of crisis
peaks predicted and most European economies began to recover. Migration policies can then
help to address these conditions. The empirical analysis is based on basic migration theory
observations, including the statistical significance of the specific parameters and the conditions
under which the model has been economically confirmed. I have also presented empirical
evidence of continuity in migration to particular macroeconomic indicators based on the
prevalent migration and economic theory. The increase in net migration has significant effects,
as well as other Macroeconomic impacts on variables such as economic growth, jobs etc. on the
labor markets in both recipient countries and countries of origin. Most studies confirm that the
economic advantages of global migration are immense, because the free movement of workers
contributes to a re-allocation of labor, thereby increasing overall welfare. The concern is that we
generally take not all economic and social costs related to these labor movements into account,
and this, of course, is a very difficult and complex task and obstacle for future research. The
understanding of broader migration patterns and the identification of key determinants and
implications of migration discussed in this paper may then allow for an accurate assessment of
migration policies and the determination of significant theoretically and empirically based
macro-and microeconomic benefits and costs of international labor migration.
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<http://epp.eurostat.ec.europa.eu>.

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