CEU eTD Collection LABOR OUTFLOW FROM THE VISEGRAD FROM OUTFLOW LABOR COUNTRIES AFTER THE EUACCESSION AFTER THE COUNTRIES In partial fulfilment of the requirements for the degree of Master of Arts Supervisor: Professor Juan Manuel Puerta Manuel Juan Professor Supervisor: Central European University European Central Department of Economics Budapest, Hungary Tímea Hardy Submitted to Submitted 2010 By I CEU eTD Collection target country. target per capita and unemployment of the receiving country is the most decisive factors in choosing the examined country, however migration the intensity isrelatively low. The results also show the GDP from resultsthe that the membershipEU positively affected migrationthe activity in eachcase of targetdestinations. By using methodpanel data with first difference estimator itcan be concluded accession from 2002 to 2007 and also what are the most factors important in choosing the possible The researchedpaper how laboroutflowthe from the four countries wasaffected due to the EU imposed labor market restrictions for the new entrants. rights as the old member such states as the four freedoms, howevermostof the EU-15 countries Slovakia -joined the Community (with six other countries) and they should enjoyedhave the same the free movement of labor. In 2004 the Visegrad countries -Hungary, Czech Republic, Poland and The purpose of paperthe discuss is to oneof mainthe features ofthe Union European membership, ABSTRACT II CEU eTD Collection underlying data for my data underlying research. provideme the Union to of European the the Statistical Office theEurostat, I acknowledge and hersupports my advice on thesis. I also would thank like to my AndreaKirchknopf, academicfor writing her supervisor guidance regarding my thesis. his and comments helpful advice, professional his me provided me and with in touch kept whose and support encouragementme inwriting helped mythesis.Even ifhe he was abroad I wouldlike toexpress my mygratefulness to supervisor, Juan Professor Manuel Puerta, ACKNOWLEDGEMENT III CEU eTD Collection REFERENCES...... 30 5 4 3 2 1 INTRODUCTION...... 1 3.4 3.3 3.2 3.1 2.2 2.1 PEDX...... 26 APPENDIX ...... 25 CONCLUSION ...... 14 EMPIRICAL ANALYSIS LABOR MARKET AND MIGRATION...... 7 LITERATURE REVIEW...... 5 Some caveats...... 23 Discussion of results...... 20 Estimation method...... 16 Data specification; migration data and targets...... 14 Three periods of the migration restrictions against the new member states...... 11 The labor market of the ...... 8 European Union TABLE OFCONTENTS IV CEU eTD Collection Table 3: Date of opening of the ...... 27 labor market Table 2: Regression coefficients e...... 21 Table 1: Variables used for the ...... 19 regressions Picture 1: Map of the Visegrad ...... 26 countries Chart 6: Comparison of minimal wage rate of the Visegrad Four and the EU-25 average...... 29 ....29 5:Chart Comparison rate of unemploymentof Visegradthe and average Four EU-25 the .....28 4:Chart Comparison of populationthe Visegradthe of countries and EU-25average the .....28 3:Chart Comparison of populationthe Visegradthe of countries and EU-25average the Chart 2: Most popular targets of the Visegrad countries before and after ...... 15 the accession Chart 1: Migration of the four countries towards the member states of EU (%)...... 14 LIST OFCHARTS V CEU eTD Collection (http://ec.europa.eu/external_relations/eea/) 1 freedoms. main four the of is one it since entrants, new the for markets labor their close not should states member any the of says that theory Economic accession. their after countries Visegrad for the markets Among the fifteen countries onlyGreat-Britain,Ireland and Swedenopenedtheir labor will be (Hans- hurt” Werner Sinn, 2000,pg 3). alike Europe Western and Eastern economies of the that and bewill overburdened „West the enjoyfreedoms in freely They work samethe and thatcan they memberstates. old argue that should countries joined newly the that disagree countries Western jobs. their lose even could laborqualified force, thatcould of decrease opportunities the employeestheir and own they well- “cheap” the of were afraid since they hadfears of newsituation the member states old the that realized countries “new” the however conditions, working better and wages higher whereany they member freely inthe enjoy “old” could states, work restrictions without can and they for them West hoped the wouldopen that Central-Europe accession After the oldto the ones? member states new from the itinduce market Does migration effects. labor as such the questions several induces research andinfluencedof Europe onpolitical, economic andeveryday life and the EUaccession was same adecisive the in European modernUnion history at dayinMay1,2004.It step the joined the - andSlovenia Malta Lithuania, Estonia, Latvia, Poland, Cyprus, Slovakia, nine -Czech other years Hungary countries Six and Republic, havealreadypassedafter “ the four freedoms are the freedom of movement of goods, persons, services and capital” and services persons, of goods, movement of freedom the are freedoms four “ the 1 INTRODUCTION 1 CEU eTD Collection problems and to form a unity against the foreign traders, foreign the against unity a form to and problems 2 countries. atthe has regarding looked nobody the EUmembershippatterns four migration the of On the other best my topic, of howeverto this havealso analyzed studies knowledge country. Several hand I found andimportant it depends on incomethe andemploymentopportunities receiving the of few papers Itis from choice is member paperthat European Union the know very states. of destination that would former of the comparative advantages dueto countries in Western move and work the analyze the more to increase should shouldand people decide countries outflow from Visegrad four the four Visegrad labor 2004the after migration,(1951) modelsof Roy standardeconomic the According to them. to this tillnowadays existsan there economic andpolitical cooperation and agreementamong comparative in of main3-6). In charts indicators the theiraddition chart economic appendix, (see the point in them acomparable affected EUaccession and the aswell and nowadays past (see Western Europe mapin the appendix).the developing They on were a similarlevelin the and Eastern between bridge the are they region; European Central-Eastern in the located are integration”all-European (OfficialwebsiteVisegrad of fourcountries). All countries of the the within interest common of fields of number in together “work They economy. their them, historicalbackground, common origins impacts influence in andsimilar traditions religious the same time and the Union four at ofjoined four European first the since countries all they migration I analyzeof the countries have common- Hungary, –existing CzechRepublic and the century. Poland,Slovakia fourteenth the since cultural and intellectualcountries I examine the labormarket of the Visegrad countries, which is a group of four states values, Among have new of and influences. ten picture the amongthe more to abroader states similar In this thesis Ianalyze a group of countries in order to compare the effects of the membership The economic-political The agreement among Visegradthe states was founded in1334 orderin to solve their 2 2 CEU eTD Collection living standard andhigher earnings opportunities. such in arethemost as theimportantfactors country receiving the on analyzedeciding what countries take member four how of Visegrad Western Union European the activity the the towards and states the advantage enlargementmigration increased the howtheEU four market Visegradcountries, the of of one of the main labor the affected enlargement EUeastward the how discussis to ofthis thesis The purpose benefits of their EU membership.however theempirical workis missingin her paperdueto lackthe of data. I also EU borders on the labormarket and migration from the Central-Eastern European countries; and of WallaceSik, Claire (2002)alsodiscussed possiblethe effects E.2005). opening the migration countries Hungarian andispotential low Czech relatively (Á.B. Simonovits Hárs, European Central-Eastern other to Comparing permanently. tosettle there ofthemplan 1.1% Hungarians, Czechsand taken together, Slovaks, plan move although to EU-15, the to only of 11.3% qualified that they concluded investigated sametime, atthe were market 6% by 2006. In the Tarki Social Research the Hungarian, the Czech and the Slovak workforce ratio of temporary the to emigrants total the Polish population increased from 2% toroughly the accession Union due European to the that result the flow; she reached migration Poland outflow from one of Katarzyna fourthe individually. countries Budnik (2007)examines the labor the analyze that areseveral researches there level. Furthermore developmental economic European reach the to inorder crucial level are EU the to countries theVisegrad catch-up of than theirmigrationmarket about labor concludedthat regulations activity. They and the fourthe countries butthey rathermarket aboutlabor their andwrote unemploymentchanges about conclusion madeajoint Mickiewicz andTomasz Bell Janice sametime. atthe countries 3 CEU eTD Collection accession. Finally the thesis ends with conclusion. handon other the migration facility howthe four analyzed countriesof thethe changed after enlargement of the European Union influenced thelabor markets of the Western countries and regression itself.the data I use for the panel regression. Then I conduct the methodology of the thesis, the panel In thismarket laborthe force and policy labor the inof European Union, the thirdone the I examine section analyze briefly I thesis my of section next the In topic. this to related researches existing I the also examine review, thesis the First startthe literature of with introduce all analysisfindings of I the and the results and I show accession. of the howfor effect the estimator consistent the Eastern outcomethe of Accordingly regressions. the by only using panel method Ican estimation get it can namely whichcanbiasand time unobservable country fixedeffects that the eliminate section simpleestimation, cross to compared feature ithas asingle because my analysis in method data panel this I use addition to In (Wooldridge, 2003). each other countries with compare the is to section required cross time, over while in of samesates changes the impact the capture to is used analysis series time since analysis”, cross-sectional and of time-series combination isa “Paneldata method. Panel be the to tends theobservations of representation years, proper the in different taken are observations and each other comparedto are countries In order to find the right estimation method the choice of the proper data set is crucial. As 4 CEU eTD Collection decreasing birth rates of the CEE regions. On the other handshealso examinedthe other Onthe of birth CEEregions. the decreasing rates and longevity greater due tothe Europe Western of the requirements meet demographic the to emphasized that there is even a danger of too few migrants shealso furthermore EU, the ofconvergence with bytheincrease will countries decrease from the Central-Europe in order labor from outflowWallace Central-Eastern European the concluded that Wallace, 2002). further(C. decline to is has ratherdecreasedandit predicted countries Central European from migration that shows reality the since it with argue economists However, conditions. working toseek better livinginorder homecontinuously move and totheir countries will Central Europeans that states Western of prospect popular a is still was and It FitzGerald picking any J. withoutBarrell, them.all (R. on countriesof Bullen, EU the out 2006)or one sending or one receiving country like UK or Germany (N. Gilpin, S. Lemos, J. Portes, C. concentrate and Most on Bauer K.Zimmermann,of 1999). reports million the F. (T. people to migrate to the West after the EU accession, 3% of population Eastern the about expected F.Zimmermann.Klaus They Thomas Bauerand which means an immigration flow membership as of such possiblethe EU ofthe before predict effect prepared even 2004,which about 3 many have been already on papers this written topic, literature is There an states. extensive papers deal with the effect of the sending andwithin viewpoint receivingcountries’ the European Union, several research EU accessionin the both on economies on themarket labor the labor of effects the about concern outflow economists Many from the new member and R.Riley, 2007) 1 LITERATURE REVIEW 5 CEU eTD Collection therefore it is worth to make an empirical analysis regarding it. regarding make itis to worth an analysis therefore empirical flowfrom Visegradcountries, four migration the EUaccession and the between correlation I couldbestliteraturefrom review of the conclude to that the nobody knowledgeexamined these countries leavingthan (Stola, D,2001). Czech migration netRepublic the balance is whichmeansmore peoplepositive, arecoming to accession and this tendency was significantly continuing after 2004. In Hungary, Slovakia and in than coming, words other Polishthe balance migration wasnegative evenbefore EU the isPoland among theonly more employeesleaving where state Visegradcountries, the are which isEurope, toincrease expected further. immigration into the Central European countries from the post-communist South-Eastern 6 CEU eTD Collection the sending country can also lead from migration sending countries. country to can the home also the financial conditions of receivingthe countries and instable and political economic situation of develop or they do not finddevelopmental a job in their homeones. and financial the country.as such causes Inseveral have can immigration states most (2007) Kaszás As Zsófia cases The saferthe employees and better want working Migration) to earn International of and higher(Theories back. it roll to wages countries all for andproblem to further a means continuous migration ofillegal is form The there lackof professionals. therefore types, make working not specific do employees thelocal country receiving inthe In thiscase longmoreform run. is frequent Theother migration force.of labor oflow-qualified flow the in the thesendingcountries for beit disadvantageous can enmasse foreign countries move to and(brain drain). areneededforif all workers countries qualified and Experts people these country receiving the for necessary is knowledge and job their and employees few relatively low-qualified ones. isthe The migration of experts channel, qualified the anarrow itaffects migration canbe forms; derived from two labor-flow of high-qualifiedthe professionals and theoriesAccording tothe migration. andthe possible barriers of causes,effects the forms, main the itimportant to examine ismarket also labor analyze of the change the to In order the minimal wage and the unemployment rate. Product, likeDomestic Gross marketthe labor of the modifications influence the that factors main of the picture boarder have a like to wewould view, since of point macroeconomic between changes force labor the where economy, labor the by market labor of concept the examine I employers and employees. It is important to analyze the labor market from 2 LABOR MARKET MIGRATION MARKET AND LABOR 7 CEU eTD Collection movement of labor, which themeans freethat EU movementcitizens canThe citizensfreely of the member statesof countries became EU citizens,labor, which give them workthe rightfor in other goods, Member Statescapital and services. differences. andregional social, unemployment both the decreasing In this social like ensuringcohesion full creatingemployment, newemploymentthesisopportunities and I focus onachieve to Theyand this economic inorder priorities defined several Memberthe States. the free stable and sustainable while stronger development, socialensuring forcohesion citizens the of which is maintaindeveloped economy,- and knowledge-based amoreable competitive to the European In theLisbon Union the aimhad the Agreement become amore dynamically to 2.1 lowis asit inRepublic is relatively review. stated literature the Czech and Slovakia Hungary, the from intensity migration the that fact tothe contribute of flow. labor the (T.Bauerand K.F.Zimmermann, migration 1999).These can obstacles canbe abarrier domestic the The also like environment to persisting personal factors. causes be restrictive also can systems tax and insurance social or systems employment different the and cultural barriers like the lack oflanguage skills and qualification or the social differences, made by restrictions The receivingsocial migration barriers suchthe or policy country. as the According Bauer and to labor Zimmerman (1999) the flow canhavepolitical andeconomic intellectual capital, and another country can gain from it (Kaszás Zsófia, 2007) country due tothe previously mentioned braindrain, theylose since and theirexperts sending the for is disadvantageous it hand other On the arecheaper. member states new of is andthelabor-force the increasing hasfearshowever thelaborsupply since Union the for thereceivingen masse advantageous country, The not canbeeconomically labor-inflow The labor market of the European Union European the of market labor The 8 CEU eTD Collection Western norms? the with line the into fall to expected also is it Insince run, long spitein the countries the of level of the slow process thewage increase can market also and morecomplex a bigger Joining Slovakia andPoland. of the falling into line, production is andin foremployment the thesituation Republic, and similar case of Czech for the four Visegradfor their economic is advantageous EUaccession for Hungary, the states GKIAs the research countries. receiving capital forthe placements work more created investments the furthermore states, became more among member balanced the of alsobut differences standards living the the theEastern states; of only production notthe increased more capital. This countries thatown Western from the Europe of part capital-poor more Eastern tothe rose investments of level mean? exactly The does this What of as well. capital freemovement the on opportunity makesan accession the However students. astourists, another to from country one travel freely could Union the of citizens the therefore restricted, was employees of movement free the Only atall. limitations no were there where for andMalta, Cyprus except states againstintroduced new member the were accession restrictions temporary Eastern After the states. member living in and increased differences both levelamongtherefore the the income standard the Union, countriesthose joined enlargement Eastern the to that Union. Due European marketof the labor have the influence differences these and states member old the and lowernew the among differences GDP compared areverythere largeforgetdevelopmental that uniformed cannot Union, European we about speak we Although to citizens. country home the as the rights same the exactly have they and EU level (see in appendix, chart 4), 9 CEU eTD Collection labor market”. (Portes and French, 2005, pg. 33) butbroadlymodest, positive, reflecting theand flexibility of speedof adjustment UK the “had from migration of been States new EUMember impact” the “the overall economic French andconcludePortes that labor (H.W.Sinn, 2000). bysupporting newcountries the “neither impose constraints on the migration” of employees nor try to avoid movement of the welfare of themaximizing is process this transformation Economists regardthat newmemberstates. to the whole Union, move back to start people countries, therefore andEastern in Western the level same on the wages are the Commissionsalaries, employment rateand labor demand. If migrationthe costs will offset the benefits and of the Europeana raisein the lead to the new bydegrees,which of countries to capital migration, the will go Union As aconsequence jobs. should inefficient the kills ithand other the andon levels wage the increases in handThe lackone memberon old of the member states workforce developed states. old more the to migrate to tend countries Eastern the from people development, and wages higher for hope the and opportunity the to Due states. Western and Eastern in the different includesflow of which andlabor migrationcapital costs, some helps keep the wageto level isproduction much higher. While technology and knowledge move freely borders,the across in concentration wagesandcapital the where isUnion, large the European the economy and countries Central-European “underdeveloped” the represents economy smaller paper the community such astheVisegrad the European countries joined Union 2004.In after this alarger join that countries on focuses which model, transformation simple the discussed Sinn sided Hans-Werner migration of The enlargement impliestwo European Union the patterns. full the decreasingemployment, unemployment. the the therefore country, the of production increased tothe contributes accession the countries 10 CEU eTD Collection they newthey avoid still havethe since citizens cannot totally migration,states memberof the the least until Austriahowever at to maintain areexpected them 2011; andcountries Germany want to still hold the restrictionsinyears, so 2006 and 2009the oldmember states have give to explanations some why they (EUROsimA, 2010).and They market Cyprus. laborcan exercise controlsseven yearsup to andfive after two A Münz regards the mostimposed some restrictions threatened against the new countries up a to transitory period exceptfor Malta twelve other countries the however community; to the theirfollowing accession members new The UK, Ireland and Sweden ensured the free movement2.2 of labor to the citizens of the ten (H. Brauckerand 2007). C.Defoort, time” over increase may countries OECD in population migrant the of bias selection negative „the is from income lower countries, the migrant increasing to thenumberof workers from beDue not will skills abletohave meeting and (except Poland). theira job expectations average of the old member states (see chart 4in appendix) and they might have fears that they less are comparedto wealthy states fourEuropean Central-Eastern by it, the since explained 2007).C. Defoort, Thelow intensity migrants from of Visegrad the canbe countries labor Braucker and performance market (H. to theirto their appropriate andskills knowledge with migrants from beinauspiciously model country that regard assumes a poorer will treated Roy in therefore occurs in countries, wealthier of Higherrather earnings equality distribution qualified aremorelikelymove workers country that to to viceand versa 1987). (Borjas, low- the then country sending the in than country target inthe equal more is it if as migration advantages peopleof (Roy,Income distribution 1951). rolehas importantan offlow of Roy model, indiscussed migrantself-selection the isdriven his by which comparative states Three periods of the migration restrictions against the new member 11 CEU eTD Collection 3 Sweden. or any UK, like Ireland constraints countries without moverather migrantsto tend to to European imposed, Central-Eastern restrictions Due tothe that it will not be a problem after 2011 either. suppose isleaditcultural to reasonable and social problems migration to and therefore cannot of be whowant society, languagemigrated, Austrian the knowledgeto apart German of from Austria. now neighboring mainlythe countries with workers to Until qualified good migrationnext canbe ifyears, therefore twenty gainful people highly-educated are moving to fill in gaps. A labormarketthe decline in force islabor supposed by 500,000 within the migrants; aregreeted migrants East-Westthe additional however about people haveconcerns Austrian as well. market labor andAustrian German the accessto as have full will they occur, oflabor flowincrease from andthe Czech Slovakia is to Hungary, Poland, Republic expected right to move as a student, apensioner or by marriage. After the transitional periodin 2011 an my analysis do not includemy just donot memberanalysis In2009 andBulgaria theEU-25 Romania states). (however countries totheVisegrad theirafter right market accession their opened workforce joined theand community they French onein Romania also and 2008. In 2007 Bulgaria and the markets labor Luxembourg and access theHolland to able were workers Slovakian and Czech later Hungarian, Polish, One year countries. Visegrad the all of against restrictions community In 2006 Portugal,(2004). Italy, Spain, GreeceandFinland removed the to the since their accession newmember states ten among the has been provided labor According EUROsimAfreeSweden to (2010)besidesthe movementUK, the and Ireland, of ( provides” migration East-West regards that Austria andGermanymust bevery “notcautious tomiss opportunities the that those, who are seeking for higher wages and better working conditions, move to the attractive US and Canada and US attractive the to move conditions, working better and wages higher for seeking are who those, R. Münz,pg.2). 3 As a conclusion economists 12 CEU eTD Collection European Union just by 2011. step by step, however freemovement the of expectedlabor isto be ensuredfor Visegrad the countrieswithin thewhole provide the free movement of4 labor to the new member states. They decided to abolish their labor market restrictions only laborof is for in theVisegradensured arelisted countries appendixthe 3). (Table market and restrictions freemovement the labor when the abolished when the memberstates measures which migration onthe countries Hungarian the (RainerMünz).control impose similar to decided whichalso countries, four the among only Hungary one the was laborfrom marketfree access their2011. to andoffer to removetheiris restrictions expected Belgium and Denmarkjoined theline and as mentioned finally I before Austria and Germany Theold member states did notopen entirely labortheir market for Visegrad the countries in2004; the EU-15 did not 13 4 Thedate CEU eTD Collection four countries. We can easily migrationthe caseof differedin howeverin after the EUaccession the tendency the of 2004, see that Union membership European Union from 2002 to2007.The labor outflow from fourthe countries increased right has a significant effect from emigrate1,000 residents from giventhe country anothermember to state of the on Polish migration activity changed after the EUaccession inshows 2004.The many how chart people Chart 1shows migration intensity the fourof Visegradindicatesof the it countries, howthe accessed2010 Source: Eurostat, inMay, Chart 1:Migrationofthefour countries towards themember states of EU (%) theaccession. andafter before situation countries. Thetime includescompare sixyears 2007in period to 2002 to from order the 2004. My of sample each includesmigration countries four towards data the of Western the in enlargement occurred Easter discussed countries. The candidate the and Union European of the member states of the database statistical main isthe which Eurostat, the from derived which countries, the of factors economic and numbers migration contains data main The 3.1 Data specification; migration dataandtargets migration Data specification; 3 EMPIRICAL EMPIRICAL ANALYSIS 14 CEU eTD Collection Source: Eurostat, accessed2010 Source: Eurostat, inMay, Chartpopular 2:Most targets of the Visegradcountries before andaftertheaccession workeager abroad. most to are can Polish employees that beRepublic. It concluded Czech the migration to hugeSlovak beby the explained can which before accession the even large was Slovakia the from outflow labor the that shows chart The activity. migration their on effect significant have not will accession EU the long-run in that realize can we away people migrated by and labor outflows2007 their were same the in as 2002, therefore from before andfive smaller1,000 residents 2004. In2006only one Czech Slovak than even became it 2005 after however theaccession; after right effect asmallhas positive inlevel. aquite low two countries, Intheother Slovakia andCzechRepublic the enlargement only but positively outflow labor the affected accession EU the that means which extent, some approximatelypeople and tofrom increaseis1,000 residents three this to continuing further decrease and reached its 2004 level. In Hungary the labor force outflow slightly rose from one member of live inanother In migration state to European the started 2007 theUnion. Polish moved andinlater even year 2005sixand seven one from people 1,000 residents decided to market,labor since migration itsto2005.In 2002 from doubled 2002 three from 1,000 people 15 CEU eTD Collection differentyears. My regression is the following: in same destinations the becauseIobserve method data panel use simple In thispaperI 3.2 database of the Union, the Eurostat. the unemployment rate of the target country. These data also comes from the central statistical working and Imeasureliving conditions. these by conditions minimal GDP,the the wage and suchasbetter countries foreign specific the moved citizens to it, analyzedwhy Ialso Besides Austria duetoits countries areGermany closeand location Central-European countries. to the primary the alsotarget Wallace (2002) concluded EUaccession. that doubled the Claire after wage Austriaopportunities. isalso immigrants country,its destination apopular almost decline to withforce 2004sincethey started outflow after had markets higher other accessto labor the of intensity the but immigration, Slovakian from derived especially be can Republic Czech of Popularity 2004. rightafter market labor its opened which three countries, the was oneof Britain maybe Great because accession, the after significantly most UK increased 1,000 German isresidents from one of Visegradthe countries. The migration level towards countries. Germany is the primary both beforedestination and 2004,about2-3 after people of many 1,000residentsof people receivingcountry the of onethe of come four from the mostChart 2shows which for popular arethe countries how four the Visegrad countries, country has already joined the European Union or not. As all of the four countries joined the has As not. joined or Union countries four European the the all of country already Slovakia and Poland. The Poland. and Slovakia time Migr Migr c t , Estimation method Estimation (year) and i , t variable contains the migration numbers of in countries numbers four of themigration destination variable the contains c , i , t

D c , i c  indicates the country indicatesthecountry be which origin Czech Republic, Hungary,can of G t  E 1 Join Join c c , , t t  variable is a dummy variable, which shows whether the E 2 GDPperCap i , t  E 3 Unemp i , t  E 4 MinWage 16 i , t  u i c and at , i , t CEU eTD Collection standard deviation, minimumstandard deviation, andmaximum valueand numbers of the the observations; Table 1 includes variablesthe for theregressions,used theirmeaning, theirmean value, are eliminated. estimator fixedFrom constantand the term the pooledthe effect equation using (Wooldridge, this method 2003). by beeliminated term can error in the autocorrelation becausethe estimator fixed effect of instead estimation difference firstI chose view, of point from another Therefore, complicated. is statistics test this of rule decision ofthisthe top on and exogeneity, strict like assumptions strong really requires test the Since be used. must statistics test Durbin-Watson the methods thetwo between choose to In order equation. original from the time over averageeffect differenced over time – or fixed effect estimations, which can be calculated by subtracting the is variable each but equation, sectional cross a simple just is it – difference first the like differentiation a simple with causes these eliminate can I time, over areconstant Since they Union.of European the member states Western a in work to and move to considering are who people the of decision the affect country it working wealthliving the target andcan provide, which conditionsand can what how andminimal show variables destination. the These rate wageof country, receiving the for unemployment be, example, which GDPpercapita, can andfixed effect year fixed effect with destination factors control these to Itried therefore problems, variable from omitted likely suffers equation regression simple This year. for reference the except dummies all time effect that factors constant is effect Union in 2004,the join equals indicator 0 before 2004and The 1afterwards. fixeddestination D D ( ( u Migr c , i , t ) c , Į i , t i ) which arises in the regressions of each country, which contains all unobserved time unobserved all contains which country, of each regressions inthe arises which

E 1 D ( Join c , t )  migr E 2 D ( c GDPperCap , i , t and the time fixed effect is i , t )  E 3 D ( Unemp i , t ) G  t , which can be considered as E 4 D ( MinWage 17 i , t )  D ( G t )  CEU eTD Collection observations for the regressions. for the observations minimal value equals ifis0 migration nothere towards giventhe destination. Iused150 18 CEU eTD Collection Source: arecoming thedata from Eviews 5.1statisticsbased onthedata Eurostat. from regressions the used for Table 1:Variables 19 CEU eTD Collection table 2. which is expected to influenceincluded, isalso trend time the and estimation firstdifference bythe arecaptured effects the outcomes. The results fixed toget inrid consideration country order heteroscedasticity. of The and correlation serial of the regression aretakeninto White rate. errors minimal wage andunemployment capita, variables; GDPper are illustrated in from originated country are run joineach Viesgrad on dummy the and on control the migration of fiveregressions causes. All mentioned duetothe above estimator difference my variables andfirst sign iscontrary with regression Iran to expectations. the of the Since method provided the none biasedresults, arepooled OLS of coefficients the significant on laborthe fromoutflow fourthe Visegrad countries. the labor market of Czech Republic, Hungary,I have run five Poland regressions in andorder to analyzeSlovakia the effects andof the Europeanthe Uniontotal accession joint on 3.3 effect Discussion of results 20 CEU eTD Collection even if we take into consideration that Poland is almost four times larger than the other the than larger times four is almost Poland that consideration into take if we even from mostly Poland in moretheir accession, 7,701 worked citizen EU 2004, EU-25after the decidedmemberin take their to chance of another Union. state European the Poland profited outflow from is EUaccession, bythe leastSlovakia the concerned more only people515 labor intensity move isslightly higher, 2004.The 997Hungarian citizens decidedto after after EUaccessionthe work881 peoplemore annually wantto in EU25.In the Hungary the given has joinedcountry already the EUand everything heldfixed. IncaseCzech Republic of any of member if EUfrom averagethe Viegrad states the of the twenty-five to the countries different among the countries. The regression shows how many people more want tomove on is of increase intensity the the is however in of The countries; all case thesame 2004. effect after countries in thewestern move work and to tended more people more and accession, year six the periodduring that means which outflow, labor the on effect positive has join the that show the regressions the and laborlevel significance 1% at even is significant variable join the cases all In outflow fromSource: arecoming thedata from Eviews 5.1statisticsbased onthedata Eurostat. from the Visegrad countries strengthened due to the EU each country asadependant variable from migration difference in included), difference (first coefficients Table 2:Regression 21 CEU eTD Collection to move there. more choose Czech state citizens if in is lower shows minimal wage destination regression the the reasonable since is not level minimal wage sign on the the negative however there, move andwork tendto are Czechpeople less country inareceiving increasing ifitisthat meaningful is variable unemployment the on sign negative The significant. is unemployment nor the neitherwage minimal the of Incase Republic Czech living standardchance. havecountriesmore opportunities since immigrants attractive, are and better higherearnings richer my that meetmemberexpectations which move that state, to decideto more will country Czech receiving citizen then one by inlevel. the increases€10 GDPpercapita the If 5% at significant isstatistically percapita variable, GDP join besides the In Czech Republic which ismore than unrealistic. country has no unemployment andmeaningless since it would meanjoin givencountry the that not did the receiving EU,the its minimal wage and its GDP per influenceswage level migration.negatively the is In interpretingthis the interception case capita equals to zero, minimal andthe statistically proven itcannot that shows regression the however increase, will iflabor level outflow minimal ishigher, negatively.the Iexpected intensity wage migration the influences rate unemployment the and outflow labor the affects positively capita per GDP aremostly reasonable. variables signs control the of the issignificant, join the variable theirintroduce outcomes. separate meet Themostly myexpectations,results although only First of all I show the joint product of the regression of the four Visegrad states and then I also times bigger thanfrom secondthe best performingcountry, Hungary. eight is about Poland of intensity migration the since 3), chart appendix, in (see countries 22 CEU eTD Collection were not simultaneously eliminated, so an unpredictable bias can come up here. Also bias by an uphere. can come so unpredictable simultaneously eliminated, were not marketrestrictions labor the fact that to due mightarise problem Another EUaccession. the of longcapture effects shortis to term too period examined the availability,of therefore data lack the dueto limitations face several with results the that evidence have some might There 3.4 Slovakia. in rate case of in unemployment Czech Republic iscaseof and capita and decisive Hungary variablesminimal wageinfluence hasno choosing inat all the however GDPdestination, per the control As considering four states. the among differs intensity migration the however labor outflow, the affects the EUaccession unit inone countries Visegrad the As wetaking expectations. lower by 137 more move people1%, tend any to to whichof 25memberthe meetsmy states, at 5%level andnegative itmeaningful. sign isalsomeans It is ifthe unemployment rate significant is alsostatistically of unemployment coefficient variable the thejoin Besides one. Czech and Hungarian from different is slightly Slovakia of regression the of outcome The level. wage minimal the of coefficient for except my expectations meet variables control the of signs the however significant, statistically is join of coefficient the only Poland of case In of Czech Republic. asin same regression variables the are the the two and minimal wage level of receivingthe is country statistically significantnot and the signs of increasesby €10, aboutmore two people tend tomove tothat destination. The unemployment country receiving the of capita GDP per the If example. Czech the to similarly variable join the besides level 5% at variable significant statistically only the is it since destination, in migration the choosing isthe mostly capita determinant In caseGDP per Hungary of Some caveats 23 CEU eTD Collection Besides these above mentioned facts, the results are still reasonably are theresults still confident. facts, mentionedreasonably above these Besides free movements of labor does not affect the labor outflow. comparing tothe whole emigrants Visegrad the population of opportunity the countries, the of 24 CEU eTD Collection useful to redo useful to whenthis analysis in more future, the are available. data Since thefour Visegrad countries joined the European Union just 6years itago; could be all choiceat of it the activity immigrants. alsoand waseventhe influence negatively migration the on effect significant no had wage minimal the however influential, be could destination of the rate andunemployment capita per GDP the that conclude I could attractive. ablecountries were livingthat toprovide for immigrantsmore are higher the standard richer the concerned andthat country was economists thetarget wealthy showed how variables,I decided of sincethey wage anddestinations. onthese the rate unemployment furtherI could byadding my variables improve the control minimal suchasGDP,regressions labor outflow and the highest migration activity can be realized in case of Poland. on the effect significant statistically positive the my anddescribed supported expectations results the both individually and conclude that I could memberaggregately four states the I used the Panel Data Method with first difference CzechRepublic. the and Hungary from Slovakia, intensity was low especially migration estimator. By running thethe Ialso after within the that literature expected Western 2004.However accordance Europe regressions of influenced migration meansmorework andtheiractivity,which people to decided live in the EU accession that positively theregression I expected running Before countries. Visegrad from outflow four the labor affected membership the how European I analyzed Union 4 CONCLUSION 25 CEU eTD Collection Source: Official websiteSource: Official ofVisegradcountries Picture of 1:Map the Visegrad countries 5 APPENDIX 26 CEU eTD Collection Table 3:Dateofopening of thelabor market Source: EUROsimA 2010AcademicTeam Source: EUROsimA Romania Bulgaria Slovenia Slovakia Czech Republic Hungary Poland Lithuania Latvia Estonia Malta Cyprus Sweden UK Ireland Finland Denmark Luxembourg Netherlands Belgium Austria Germany France Greece Italy Spain Portugal Poland 2007 2007 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2006 2009 2007 2007 2009 2011 2011 2008 2006 2006 2006 2006 Hungary 2004 2004 2004 2004 2004 2006 2009 2007 2007 2009 2011 2011 2008 2006 2006 2006 2006 2007 2007 2004 2004 2004 2004 2004 2004 2004 Czech Republic 2004 2004 2004 2004 2004 2006 2009 2007 2007 2009 2011 2011 2008 2006 2006 2006 2006 2007 2007 2004 2004 2004 2004 2004 2004 2004 Slovakia 2004 2004 2004 2004 2004 2006 2009 2007 2007 2009 2011 2011 2008 2006 2006 2006 2006 2007 2007 2004 2004 2004 2004 2004 2004 2004 27 CEU eTD Collection Source: Eurostat, accessed2010 Source: Eurostat, onMay, Chart 4:Comparison of the population of the Visegrad countries and theEU-25 average accessed2010 Source: Eurostat, onMay, Chart 3:Comparison of the populationof the Visegrad countries and theEU-25 average 28 CEU eTD Collection Chart 6:Comparison ofminimal wage rate of theVisegrad EU-25 Four and the average average Chart 5:Comparison of unemployment rateoftheVisegrad EU-25 Four and the Source: Eurostat, accessed on May, 2010 Source: Eurostat,accessedonMay,2010 29 CEU eTD Collection EUROsimA European Commission Eurostat – Herbert BrÄucker and Cecily Defoort Cecily and BrÄucker Herbert Hárs Ágnes, Bori SimonovitsandEndre Sik, 2005 Hans-Werner Sinn – GKI – ‘ Claire Wallace, 2002 Borjas, G.J. 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