Optimum Currency Areas and Labour Migration Incentives : A Country Panel Data Analysis of European Labour Mobility 2000-2023
Year: 2026
Type: dissertation
Abstract: This paper examines the determinants of labour mobility in Europe and the isolated effect of EU and EMU membership on net migration, using panel data of 31 European countries over the period 2000-2023. Three fixed effects models are estimated using Two Stage Least Squares (2SLS) instrumentation to address simultaneity bias. The findings indicate that real wages, unemployment, government debt and tax burden, are statistically significant determinants of net migration, consistent with the theoretical assumptions of Optimum Currency Area (OCA) theory. EU membership is found to have a significant negative effect on net migration, which confirms its facilitation of mobility. EMU membership is however associated with a significant positive effect, hypothetically suggesting that eurozone countries function as destinations for intra EU-migrants. EMU membership is further found to increase the sensitivity of labour mobility to unemployment differentials, although this effect is associated with model specification dependency. Taken together, the results suggest that whilst macroeconomic signals underpin labour mobility in expected directions, the magnitude of adjustment remains limited relative to the levels assumed for an optimally functioning currency area.
Authors: Bokne, Hannes, Håkansson, Daniel
Language: Swedish
Topic: Migration and Labor Dynamics
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7165427136
Cites:
Cited by:
Related to: