Abstract
ABSTRACTThis 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.
Highlights
AND MOTIVATIONThe recent EU eastward enlargement resulted in substantial East-West migration flows, especially of young and highly educated people from CEE countries (Kahanec and 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, including high unemployment rates, as well as the specific characteristics of labour market transitions experienced by young people, in particular labour market mobility both within and between economies
Returnee selection patterns may differ significantly depending on the framework considered: apparently, young returnees are selected from stayers differently than from migrants
Summary
The recent EU eastward enlargement resulted in substantial East-West migration flows, especially of young and highly educated people from CEE countries (Kahanec and Zimmermann 2010). Existing studies on return migrants have conducted various and wide-ranging analyses of the impact of foreign work experience on the earnings of returning migrants (Barrett et al 2001, Hazans 2008, Radu and Martin 2012, Zaiceva and Zimmermann 2012, Galgóczi et al 2012, Lang et al 2012, Barcevičius et al 2012, White 2014). There is still relatively little known about the selection to return and post-return labour market outcomes in the context of young people. 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 higher extent (Kahanec and Fabo, 2013)
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