The basic ‘analysis’ presented above shows that a more nuanced and dis-ciplined approach is needed to disentangle the ‘migration effect’ from a number of other potential sources of labour market changes, including those resulting directly from EU enlargement (e.g. the single market, EU funds, infrastructural investments, and so forth).
From the perspective of economics, labour migration implies tem-porary or permanent movement of labour resources, which effects changes within the relative supply of production factors (labour in relation to cap-ital), and, consequently, may lead to further adjustments at the level of wages, employment, and unemployment. As a result, in the short run, the outflow of migrants from a given country may be regarded as a sort of sup-22%
Stock of (temporary) migrants, in millions (right axis) Employment growth (annual changes)
Fig. 5.3 Migration from Poland (stock of temporary migrants staying abroad) and selected macroeconomic variables, 2004–17. Source: Own elaboration based on GUS data and Roszkowska et al. (2017).
ply shock. Available studies of post-accession migration reveal that the issue is more complex. Instead, to assess the effects of migration at the level of the labour market of the migrants’ country of origin, it is neces-sary to refer to a variety of time perspectives and consider all different levels of analysis (i.e. local, regional and national) (Borjas 2004; Janicka and Kowalska 2010; Kaczmarczyk, Mioduszewska and Żylicz 2009).
In the short term, the main effects are related to a change in the sup-ply of labour and thus refer particularly to changes in employment and unemployment, and eventually in the number of those who are out of the labour force. In the medium term, a tendency to adjust to market equilib-rium might be visible, which may result, among other effects, in pressure on wages.
Additionally, structural features of the outflow are of some impor-tance, particularly the quality of human capital. In the long term, more fundamental adjustments are possible, including changes in the structure of the economy (capital/labour ratio, demand-side modifications); occu-pational and social mobility of native workers; and immigration of foreign labour. In this section we focus on short- and medium-term effects. We elaborate on the long-term developments in Section 4.
Considering both short- and long-term effects of migration, it is important to acknowledge that Poland, similar to other transition econo-mies, struggled after the onset of transition with a severe oversupply of labour. As a result, during most of the pre-accession period, unemploy-ment was very high. In 2002, immediately prior to the accession, it amounted to over 20 per cent. In fact it was commonly presented as the main trigger of incomplete migration, as discussed in chapter 2 (see also Kaczmarczyk 2005). Additionally, the Polish labour market used to be described in terms of low participation and employment rates, structural mismatches and a large share of long-term unemployment (Kaczmarczyk 2011). In 2004, the number of unemployed people started gradually to decrease. According to Labour Force Survey (LFS) data, the number of unemployed people decreased from 3.2 million in early 2004 to 1.2 mil-lion in late 2008, while the unemployment rate decreased from 19.1 per cent to 7.1 per cent.1 (See also figures 5.1–5.3.)
Against this background, the potential effects of post-accession migration should be assessed. All available statistical data prove that at the same time as the mass outflow of migrants was taking place, the situ-ation in the domestic labour market was improving. This pertained to both the decrease in the number of people remaining out of work and the fall of the unemployment rate to a level not registered during the transition period. Thus, a basic analysis such as the one presented in the previous
THE IMPACT OF MIGRATION ON POLAND 96
section may suggest that the decline in unemployment might be an out-come of post-accession migration.
Nonetheless, a series of arguments challenge this thesis, which is close to the commonly invoked ‘unemployment export’ hypothesis. First, the fall in unemployment as observed since 2004 was also strongly corre-lated with a rise in employment: employment rates increased from 44 per cent to 50.1 per cent between the second quarter of 2004 and the second quarter of 2008. Second, the general trends in the labour market contin-ued even once migration rates had stabilised (i.e. in 2007 and 2008), which points to the fact that changes in the Polish labour market may have resulted primarily from structural and business cycle changes in the whole economy. Third, the scale of migration from Poland was not large enough to substantially impact on the unemployment level. For example, between 2004 and 2008 unemployment fell by two million, which is a much higher number than the total outflow, including also persons not active on the labour market (Kaczmarczyk 2011; Kaczmarczyk 2014).
These reservations with regard to the export of unemployment argu-ment are supported by Bukowski, Koloch and Lewandowski (2008), who investigated the impact on unemployment in Poland of changes in demo-graphic structure, economic activity and employment. They found that changes in the level of unemployment in the case of people of mobile age should be attributed predominantly to a rise (or decline) in the level of employment (i.e. the process of job creation) (see also previous section and figure 5.3). Effects of both the remaining factors were marginal. How-ever, they noted an impact of changes in the proportion of people eco-nomically active, which can be attributed to migration. Similarly, Budnik (2007) revealed that, even if post-accession migration from Poland was quite substantial, it had only a moderate impact on the estimated shares of people employed, unemployed or economically inactive. For the direct post-accession period (2004–5), the bias in unemployment rate due to migration (the difference between unemployment rates estimated for migration and non-migration scenarios) was negligible. Similar results are provided by Barrell, Fitzgerald and Riley (2010).
Nonetheless, even if national-level statistics do not provide evidence that migration was particularly responsible for reducing unemployment in Poland in 2004–8, quantitative and qualitative research at the local level tells a different story. As mentioned above, growth was uneven across Poland. In some locations with less economic growth and a high level of unemployment, or employment in the informal economy, ‘unemployment export’ seemed very visible to the casual observer. It is chronicled in ethnographic research (e.g. Rakowski 2016; White 2017). Similarly, a
quantitative study by Kaczmarczyk and Okólski (2017) based on regional LFS data provided clear evidence that there is a statistically significant (and negative) relationship between the scale of outflow and unemploy-ment at the regional level.
With regard to medium-term effects (i.e. the impacts on wage levels nationally), the evidence of migration influence is also inconclusive. As mentioned earlier in this chapter, wages have risen substantially in Poland since EU accession. The emigration of part of the labour force should drive up wages for workers remaining in the sending country. How-ever, Budnik (2008) measured the impact of migration on wage levels (using a search and matching model) and concluded that the impact on the wage rate of an increase in outflow of workers of around 4.5 per cent, as observed between 2002 and 2006, was moderate and in 2006 was lower than 1 per cent.2 Kowalska (2011) provides similar results. She estimated the elasticity of wages in Poland as a consequence of migration from Poland, based on LFS data. Her analysis revealed that a 10 per cent labour supply shock caused an increase in wages of between 2 and 4 per cent (on average, depending on certain assumptions). Interestingly, elasticity of wages with respect to international mobility was higher for men than for women and for employees under 30 than for older employees. As shown by Gumuła et al. (2011), when post-accession migration reached its peak (mid 2007), almost 30 per cent of employers declared migration of Poles an important factor responsible for pressure on wages. This share declined to 1 per cent in 2008 and 2009, and to 0 per cent in 2010, not-withstanding still massive emigration (Gumuła et al. 2011; Janicka and Kowalska 2010). The fact that migration had more of an impact on increasing men’s wages than women’s points to the importance of selec-tivity issues, as discussed in chapter 2: the fact that some types of people migrate more than others. It also reflects different sectoral impacts of migration from Poland.
As concluded above, the transition period in Poland saw a dra-matically difficult situation on the labour market, marked by severe unem-ployment. Thus vacancy rates were extremely low for most of that period.
The vacancy rate and, particularly, the share of firms reporting problems with finding employees increased rapidly from 2005 until late 2007 (i.e.
in the period of the most dynamic outflow). The number of companies experiencing labour shortages as a barrier to growth varied, from practi-cally none prior to 2005, to 14.2 per cent in the third quarter of 2007. It then fell again, to around 6 per cent, in 2008. The most seriously hit sec-tors included construction (35 per cent of firms reporting hiring difficul-ties) and manufacturing (over 15 per cent) (NBP 2008). Importantly,
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throughout 2007, labour shortages were declared the most important bar-rier to growth (NBP 2008).
Nonetheless, as the business cycle phase changed in 2008, labour shortages ceased to pose a serious problem for most firms. This suggests, again, that labour shortages in the post-accession phase were an outcome primarily of the favourable economic situation rather than necessarily of outward migration. This conclusion becomes even clearer when referring to figure 5.3, particularly to the labour market tightness index. This shows that although the tendency continues, more recently it has been driven increasingly by demographic factors unconnected to migration (i.e. to the age structure of the population).
The arguments presented above are to a large extent supported by several studies relying on general equilibrium models or simulation approaches. Across all the evidenced cases, the effects of migration for the Polish labour market were evaluated as negligible but generally positive (Barrell, Fitzgerald and Riley 2010; Brücker et al. 2009; Holland et al.
2011). (See figure 5.4.) Importantly, all the studies quoted argued that post-accession migration from Poland and other CEE countries brought substantial benefits, but particularly for receiving economies, and for the
4 2
–2
Czech Rep. Hungary Poland Slovak Rep. Romania EU8 EU2
–4 –6 –8 –10 –12
GDP age adjusted GDP per capita age adjusted Unemployment rate Real wages 0
Fig. 5.4 Short- and medium-term effects of post-accession migration, Poland and other CEE countries, 2004–10, changes in per cent (GDP, real wages) or percentage points (unemployment rate). Source: Own elaboration based on Holland et al. (2011).
United Kingdom and Ireland most of all. In turn, the effects of the outflow for sending economies are mixed. While in Poland and Slovakia, the effects of migration are low but predominantly positive, in those CEE countries that noted very limited emigration in this period (the Czech Republic and Hungary), the effects are insignificant. In the case of Romania and the Baltic states, massive out-migration contributed to a relatively large decline in GDP and did not bring any serious improvement in the labour market.
This would supports the thesis that the effects of migration depend on the scale of the outflow but are also strongly conditional on structural condi-tions at origin and on the general economic performance of the sending country. In fact, the already mentioned positive changes in the labour mar-ket ought, rather, to be credited to changes in the sphere of creating (and destroying) job offers. These processes of job creation/destruction, in turn, largely depended on a particular phase of the business cycle, and were further enhanced by the influx of EU funds.
Nonetheless, one needs to address also the migration effects on regional and local labour markets, which can be far more severe. Addi-tionally, it is important to consider the more long-term effects of migra-tion, particularly on human capital formation (brain drain/brain gain debate), and the possible impacts of return migration.
The selective nature of post-accession migration from Poland man-ifests itself, above all, in the overrepresentation of highly educated people.
The mobility of highly educated people potentially generates medium- and long-term effects that may impact the human resource capital in the migrants’ country of origin, and, therefore, influence its potential for growth. ‘Brain drain’, the commonly used term to describe this phe-nomenon, is derived from an approach, developed in the 1960s and 1970s, that focused on the negative effects connected to the outflow of highly educated people, including the fiscal costs, since taxpayers in the sending country were paying for the education of future migrants, or the negative impact of migration on the productivity of other factors of pro-duction (particularly capital) (Bhagwati and Hamada 1974; Grubel and Scott 1966).
In the 1990s, however, a new approach was proposed to challenge this already well- established view of highly skilled mobility. The so-called
‘new economics of brain drain’ rests on an assumption that migration may, in fact, be seen through probabilistic lenses. In other words, the fact that migration may happen in the future is in itself something that may have an impact (cf. the ‘prospect channel’ of migration influence mentioned in chapter 3). The migration option, if available, may not be utilised in fact.
We can also assume that in specific circumstances the possibility of going
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abroad at some stage in the future may induce people to become more highly educated or skilled, and to make bigger investments in human cap-ital, since they expect a higher return from the human capital abroad. In such cases, even large-scale migration of highly educated people may increase human resource capital in the migrants’ country of origin. Schol-ars refer to this as ‘brain gain’ or ‘beneficial brain drain’ (Beine, Docquier and Rapoport 2001; Mountford 1997; Stark 2005).
Fihel et al. (2009) presented one of the first attempts to quantify the skill selection process in the case of post-accession migration. In the case of Poland as well as other CEE countries, there was a clear pattern of pos-itive selection of persons who completed tertiary education (even if controlling for age differences between migrants and the sending popula-tion). If we agree on a purely statistical meaning of the term ‘brain drain’
(that migrants are more highly-educated on average than stayers), then we can conclude that post-accession migration did result in brain drain.
This was also indicated by a series of other studies (Clark, Drinkwater and Robinson 2014; Drinkwater, Eade and Garapich 2009; Holland et al. 2011; Kaczmarczyk and Tyrowicz 2015; Sporton 2013). Hence, although the trend in Poland has been for a steady increase in the share of university graduates (see chapter 2), a simple reading of the situation would be that migration creates a counter-trend and somewhat dimin-ishes the scale of this phenomenon. However, the situation is perhaps more complex, as discussed in the following section.
How the effects of this phenomenon should be assessed is an addi-tional question. ‘Drain effect’3 implies that the selective outflow of well- educated or skilled persons should impact negatively on labour resources and thus on the economic performance of a sending country. Available statistical evidence shows that it is extremely difficult to ascribe a direct impact to post-accession migration on the skill mismatches in specific sec-tors and regions in Poland.
On the one hand, as noted in the previous section, the immediate post-accession period was apparently marked by a growing scale of labour shortages. The number of vacancies increased rapidly from 2005 until the third quarter of 2007, and this process was accompanied by a rising num-ber of companies reporting labour shortages as a barrier to growth (see also the previous section). On the other hand, labour shortages ceased to be perceived as a serious issue in the first phase of recession, despite the still extremely high scale of out-migration. Moreover, as already men-tioned, the shortages of workers were most apparent in construction (with 35 per cent of firms affected) and manufacturing (more than 15 per cent). They were comprised mainly of qualified workers (in 2007–8 a
shortage of qualified workers was reported by almost 40 per cent of Polish companies) (Kaczmarczyk, Mioduszewska and Żylicz; NBP 2008).
Statistical data therefore suggest that the labour shortages as observed in the post-accession period are comprised mainly of qualified workers, but not necessarily those who might be described as highly skilled. The main sectors suffering shortage of labour included construc-tion and manufacturing. Considering the skill structure and work expe-rience of post-accession migrants, it is hardly possible that these job vacancies could be filled by the migrants choosing EU labour markets. The point is that post-accession migration comprised large numbers of persons with tertiary education and, additionally, persons who were leaving abroad directly after completing their formal education and without expe-rience on the Polish labour market. They were not interested in taking up low-skilled jobs in their location of origin, even if they were ready to take this kind of job while staying abroad. Thus it is commonly acknowledged that due to the general situation on the Polish labour market (an over-supply of university-educated labour), post-accession migration is to be assessed more in terms of ‘brain overflow’ 4 than ‘brain drain’ (Kacz-marczyk, Mioduszewska and Żylicz 2009; Kaczmarczyk and Okólski 2008; Kahanec and Zimmermann 2009).
Importantly, even if the impact of post-accession migration on labour markets in the region seems largely exaggerated, and although there is no clear evidence of the brain drain on a national level, there is a com-mon perception that the effects of migration are clearly visible on the sec-toral level, particularly in health services. There is no reliable data on the real scale of migration of medical professionals from Poland, but some indication of the scale of potential migration of this occupational group is provided by the numbers of certificates confirming qualifications and professional experience issued to Polish medical professionals (as required by employers in EU15 countries). The data shows that the scale of the out-flow is not so large as to pose a threat to the Polish healthcare system in the short term. Nonetheless, some serious sectoral imbalances are possi-ble and already visipossi-ble, as the outflow is most significant in specialisations receiving the lowest average incomes within Poland’s medical labour mar-ket (anesthesiologists, radiologists) and in those for which there is high demand within foreign labour markets (e.g. plastic surgeons). A tempo-rary or permanent imbalance in local and regional labour markets is also likely to appear, or has already appeared (Kaczmarczyk 2014; Kacz-marczyk and Okólski 2005).
As suggested by Beine et al. (2001), the existence of dynamic or ex ante effect (see endnote 3) implies an increase in the investment in
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education driven by migration prospects. In Poland, one might guess that this was occurring, and contributing to the already mentioned growing popularity of university education. There are over 1.8 million students in Poland, and data from the Central Statistical Office (GUS) shows that already in the early 2000s, the gross enrollment ratio (the ratio of current students within a given age cohort) in the 19–24 age group was close to 50 per cent. The question is, however, whether this change is
education driven by migration prospects. In Poland, one might guess that this was occurring, and contributing to the already mentioned growing popularity of university education. There are over 1.8 million students in Poland, and data from the Central Statistical Office (GUS) shows that already in the early 2000s, the gross enrollment ratio (the ratio of current students within a given age cohort) in the 19–24 age group was close to 50 per cent. The question is, however, whether this change is