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ABSTRACT:

This paper studies the impact of a large emigration wave on real wages in the source country. Following EU enlargement in 2004, a large share of the workforce of the Central and Eastern Europe emigrated to Western Europe. Using data from Lithuania for the calibration of a factor demand model I show that emigration had a significant short-run impact on real wages in the source country. In particular, emigration led to a change in the wage distribution between young and old workers. The wages of young workers increased by 6%, whereas the wages of old workers decreased by around 1%. On the contrary, I find no effect on the wage distribution between workers of different education levels.

SUGGESTED CITATION:
Benjamin Elsner, "Emigration and Wages: The EU Enlargement Experiment" (November 23, 2011). Fondazione Eni Enrico Mattei Working Papers. Working Paper 627.
http://www.bepress.com/feem/paper627