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FULLTEXT01.Pdf The Common Nordic Labour Market at 50 Peder J. Pedersen, Marianne Røed, Eskil Wadensjö TemaNord 2008:506 The Common Nordic Labour Market at 50 TemaNord 2008:506 © Nordic Council of Ministers, Copenhagen 2008 ISBN 978-92-893-1691-0 Print: Ekspressen Tryk & Kopicenter Copies: 250 Printed on environmentally friendly paper This publication can be ordered on www.norden.org/order. Other Nordic publications are available at www.norden.org/publications Printed in Denmark Nordic Council of Ministers Nordic Council Store Strandstræde 18 Store Strandstræde 18 DK-1255 Copenhagen K DK-1255 Copenhagen K Phone (+45) 3396 0200 Phone (+45) 3396 0400 Fax (+45) 3396 0202 Fax (+45) 3311 1870 www.norden.org Written by: Peder J. Pedersen, School of Economics and Management, University of Aarhus, Danish National Institute of Social Research and IZA, Bonn Marianne Røed Institute for Social Research, Oslo Eskil Wadensjö Swedish Institute for Social Research (SOFI), Stockholm University, SULCIS, Stockholm University and IZA, Bonn Nordic co-operation Nordic cooperation is one of the world’s most extensive forms of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and three autonomous areas: the Faroe Islands, Green- land, and Åland. Nordic cooperation has firm traditions in politics, the economy, and culture. It plays an important role in European and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic cooperation seeks to safeguard Nordic and regional interests and principles in the global community. Common Nordic values help the region solidify its position as one of the world’s most innovative and competitive. Contents Contents.............................................................................................................................. 5 Summary ............................................................................................................................ 7 1. Introduction .................................................................................................................. 11 References.................................................................................................................. 17 2. A survey of earlier studies of intra Nordic migration flows.......................................... 19 2.1 The factors behind the movements according to earlier research ......................... 19 2.2 Research on the three topics................................................................................. 20 2.3 The empirical studies............................................................................................ 30 2.4 Concluding remarks ............................................................................................. 39 References.................................................................................................................. 42 3. The extent of mobility .................................................................................................. 43 3.1 Introduction.......................................................................................................... 43 3.2 The extent of mobility before 1990 ...................................................................... 44 3.3 The extent of mobility after 1990......................................................................... 53 3.4 Conclusions.......................................................................................................... 70 References.................................................................................................................. 71 4. Mobility factors ............................................................................................................ 73 4.1 Cyclical differences and the impact on mobility .................................................. 73 4.2. Commuting and other cross-border work in the Nordic countries....................... 81 References.................................................................................................................. 86 5. Who are the intra-Nordic migrants and who migrates out of the Nordic region? ......... 87 5.1 The skill composition of Nordic migration flows – introduction.......................... 87 5.2 Why some move and others stay .......................................................................... 90 5.3 Migration patterns of educational and occupational groups ................................. 94 5.4 How much do Nordic citizens move?................................................................... 94 5.5 Where do Nordic citizens move?.......................................................................... 96 5.6 The Norwegian case ............................................................................................. 99 5.7 How do the intra-Nordic migrants manage?....................................................... 104 5.8 Summary and discussion: Who are the Nordic migrants? .................................. 107 References................................................................................................................ 110 Tables ............................................................................................................................. 113 6. Conclusions ................................................................................................................ 119 Sammanfattning.............................................................................................................. 125 Summary Free mobility of labour across national boarders was formalized by an agreement between Denmark, Finland, Island, Norway and Sweden in 1954. During the post war period this common labour market of the Nor- dic region has been unique within regard to the length of time it has been working and with regard to the level of freedom with which citizens have been able to move among the member countries. From a researcher’s point of view it has also been unique with regard to the availability of data regarding the flows of people and variables indicating the states of supply and demand in the labour markets of sending and receiving areas. In general the creation of free cross-country mobility serves two main gains. First, it creates a potential welfare gain for individuals who become free to search for jobs in a much broader labour market reducing both the incidence and duration of spells of unemployment, and increasing earn- ings in a long run perspective. Secondly, free mobility may contribute to dampening cyclical swings by attracting labour from neighbouring coun- tries during an upswing and by reducing the increase in unemployment through emigration to neighbouring countries during a downturn. How- ever, to build down national boarders between labour markets also have unfavourable consequences for groups in the sending and receiving coun- tries. The shifts in labour supply caused by immigration intensify the competition in certain segments of the labour market which may result in higher unemployment or lower wages. From the point of view of sending countries main problems have been related to brain drain and its effects. The Nordic countries have for a long time constituted a region where the process of migration can be studied when all significant institutional barriers to labour mobility across national boarders have been removed. The purpose of the present study is to collect evidence regarding the ex- perience coming from this Nordic experiment in a historical setting of its own, and at the same time consider the Nordic case in a broader, mostly European, perspective The majority of empirical studies on migration among the Nordic countries have addressed the question about driving forces, i.e., about which push and pull factors that have triggered and maintained flows of labour across national boarders within the Nordic region. In Chapter 2 these studies which cover the period from the early six- ties to nineteen ninety are reviewed. Taken together the studies indicate that economic push- and pull factors have played a part in the determina- tion of the inter-Nordic migratory patterns. However, pull factors in the main receiving economy; the Swedish one, is pointed out as the most important triggering devices. 8 The Common Nordic labour Market at 50 The increasing disequilibrium in Finland during the sixties and seven- ties coincided with a reverse disequilibrium situation in Sweden, i.e., a period of labour shortage due to the fast growing manufacturing industry. Thus, the high labour migration from Finland to Sweden seemed to be the answer to a problem in both countries. The much more sever unemploy- ment problems in Finland during later periods did not increase the out migration from the country. All the major peaks in the intra Nordic mi- gration flow in the pre nineteen ninety period appear simultaneously with peaks in the vacancy rate in Sweden. However, the demand pull from the receiving economy is not sufficient. The Norwegians did not move to Sweden during the sixties and early seventies even though the average welfare gap between Norway and Sweden was just as big as between Finland and Sweden. The general pattern seems to be that problems in the labour market of the home country; unemployment, insufficient demand, structural changes, build up a migration pressure which is released if a pull effect is exercised strongly from the labour market of the receiving countries. In Chapter three the migration flows between and from Norway,
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