Crossing Borders

The paper presented in this ZEW Research Seminar studies labor market effects of out-migration and in-migration in the context of cross-border commuting. It investigates an EU policy reform granting Czech citizens free access to the German labor market from 2011, to quantify the impact of East-West migration on local labor markets in both countries. The majority of Czech workers commutes across the border to Germany and the author exploits this spatial variation for a difference-in-differences approach. Using a novel dataset on Czech regions, the author shows that municipalities in the Czech border region experienced a decline in unemployment rates as result of the worker outflow, while vacancies increased. For German municipalities, the paper presented in this ZEW Research Seminar finds no effects on regional employment, and lower wage growth in the long term. The author then extends the analysis from the regional to the individual level, enabling the author to investigate labor market effects of native incumbent workers in Germany. These workers experienced lower wage growth, but increased employment such that their earnings relative to control workers remained constant.