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November 28, 2018

Cluster-Seminar Public Finances and Living Conditions

How did EU Eastern enlargement affect the Austrian labor market?


November 28, 2018
12:30 - 13:30


Karl Popper Room
DIW Berlin
Room 2.3.020
Mohrenstr. 58
10117 Berlin


Julia Schmieder
In recent years, there has been growing public and political opposition against the principle of free movement of labor within the European Union. Already before the first EU Eastern enlargement in 2004, potential adverse labor market effects for natives in the old EU Member States were widely discussed. Despite these discussions, there is little ex-post research on the impact of EU Eastern enlargement on old Member States' labor markets. In our paper, we want to study how the EU Eastern enlargement affected the Austrian labor market. First, we provide a descriptive analysis of the development of labor supply from the new EU Member States in the Austrian labor market with a focus on the period around their EU entry and free labor market access. Second, we want to exploit the observed patterns in immigration from the EU8 countries that joined in 2004 to identify the effect on the Austrian labor market. More precisely, we want to use variation in the EU8 worker density on the community level over time and over the distance to the closest EU8 border. We find that the share of EU8 employees among all employees in Austria increased by a factor of four from 2003 to 2015. With free access, we see a shift in the composition of migrant workers toward lower-qualified and younger groups. We can further show that the inflow of EU8 employment over time is larger in communities closer to the border.