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 young people’s various labour market issues and their high exposure to the consequences of the recent financial crisis. We use the Estonian Labour Force Survey data and the Estonian Population and Housing Census 2011 data in combination with the Estonian Tax and Customs Office data on individual payroll taxes. The econometric analysis focuses on the selection to temporary migration and 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 the 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.
Highlights
Introduction and motivationThe recent EU eastward enlargement resulted in substantial East-West migration flows, especially among young and highly educated people from CEE countries (Kahanec & Zimmermann, 2010)
Focusing the research on young returnees is motivated by the recent enlargement of the scope of labour market issues faced by youth in Europe
Since our research focuses on a youth sample, we may expect a considerable share of returnees to experience non-employment temporary migration, unless we limit the definition of returnees to purely work experience abroad
Summary
Introduction and motivationThe recent EU eastward enlargement resulted in substantial East-West migration flows, especially among young and highly educated people from CEE countries (Kahanec & Zimmermann, 2010). Focusing the research on young returnees is motivated by the recent enlargement of the scope of labour market issues faced by youth in Europe. Those include high unemployment rates, specific characteristics of labour market transitions experienced by young people, in particular labour market mobility both within and between economies (for an overview of the recent issues of youth in European labour markets, see O’Reilly et al, 2015). Recent economic shocks enforced a higher magnitude of labour market issues among youth, and young migrants were exposed to the effect of economic slowdown to a greater extent (Kahanec & Fabo, 2013)
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