The labour market performance of young return migrants after the crisis in CEE countries: the case of Estonia

Abstract

ABSTRACT This paper extends the earlier literature on the effects of return migration by studying selection and labour market performance in terms of the wages of young returnees in particular. The topic is motivated by various labour market issues for young people and their high exposure to the consequences of the recent financial crisis. We use Estonian Labour Force Survey data and Estonian Population and Housing Census 2011 data in combination with Estonian Tax and Customs Office data on individual payroll taxes. The econometric analysis focuses on the selection to temporary migration and the estimation of wage premium to return, along with the decomposition of the returnee-stayer wage gap using the Oaxaca-Blinder approach and an investigation of wage premium dynamics over time after return. The results generally show higher returns from temporary labour migration for young people relative to older people, and among youth, the share of the unexplained fraction of the wage premium is also higher. These results imply a stronger role of experience gained abroad on earnings for youth.