Recent Development of Labor Mobility in the EU: Comparative Study on the British and German Cases

Abstract

A new trend of labor mobility has been emerging amid the varying economic conditions among EU members. Since the global financial crisis there have been diverging trends in labor market conditions in Europe. The unemployment rate in Southern Europe still remains at its record high, while Northern Europe maintains a relatively stable employment figure. Such diverging labor market conditions have been reflected on the labor movement within the EU. Countries such as Germany and the UK attract more immigrants to their job markets, while southern countries become ‘net exporters’ of their labor to other parts of Europe.A number of studies conclude that labor mobility within the EU is determined by income differences between the migrant departing and hosting countries. The distinctive business cycles between countries (i.e. unemployment gaps) are insufficient for explaining the intra-European labor movement. These empirical facts were well spotlighted under the arguments of an optimal currency area (OCA); the lack of labor mobility within the Euro area suggests that it is far from being qualified as an OCA. It was hardly expected that labor mobility would work as an ‘absorber’ in the face of asymmetric shocks. However, recent observations show that internal migration within the EU has been increasingly affected by the difference in unemployment rates between countries.