CMR Seminar Warsaw – November 2007 Prof. Ramón Mahía – Rafael de Arce Applied Economics Department MIGRATION INTO SPAIN: Areas of Research

Introduction Applied Economy Department (Universidad Autónoma of Madrid) Teaching areas: Econometrics (UAM) Multivariate Analysis (SPSS Consultants) Simulation models for International Trade (Paris – Dauphine University) Main Research areas: International Trade: Free Trade Scenarios Simulation, Tarification (FEMISE Network) Multivariate and Econometric models for helping corporate decision processes: forecasting, simulation.. (L.R. Klein Institute) NEW AREA: Migration (L.R. Klein Institute)

Structure of Presentation SOME DATA ABOUT IMMIGRATION IN SPAIN MAIN CAUSES OF MIGRATION FROM THE SPANISH PERSPECTIVE FOCUS AREAS IN SPANISH MIGRATION ECONOMICS RESEARCH MAIN PROJECTS ON MIGRATION OF OUR TEAM ONE EXAMPLE: ‘ Macroeconomic impact of immigration in Madrid Region: Structure’

SPAIN AS A CONTRY OF IMMIGRATION Spain was, for decades, a net sending country of migrants and, in just few years, has become the preferred European destination country. SOME DATA

SPAIN AS A CONTRY OF IMMIGRATION According to UN 2006 report, Spain was one of the main three world migration receiving countries for the period 1990 and 2005 (+ EEUU and Germany). In 2005 and 2006, Spain was the main receiving country of ‘economic’ migrants of the 30 OECD countries as % of the total population. During 2004, 2005 & 2006, 1 out of 3 immigrants entering EU came into Spain. The % of migrant population (10%) is the second highest of Europe and the fourth of the World; this % is well above 10% in some regions, for example in Madrid Region. SOME DATA

SPAIN AS A CONTRY OF IMMIGRATION (1) Demographical trend (aging structure) CAUSES OF IMMIGRATION

SPAIN AS A CONTRY OF IMMIGRATION Demographical trend (educational structure) CAUSES OF MIGRATION

SPAIN AS A CONTRY OF IMMIGRATION (2) Sustained economic growth WITH HUGE EMPLOYMENT creation: The Real GDP Growth average was 3.4% (the second higher among EU-12 countries) AND/BUT….. ….. the main sources of GDP growth (65%) were/are Building and Services sectors activities….. …. this sectors show a heavy share of Labour over Production so….... during , nearly 4.7 millions of new employments were created: 40% of EU-12.. CAUSES OF MIGRATION

SPAIN AS A CONTRY OF IMMIGRATION CAUSES OF MIGRATION

SPAIN AS A CONTRY OF IMMIGRATION … 4,7 millions of employments created without any substantial reduction of unemployment rate and no substantial rise in activity rate: NATIVE ACTIVE population only increased 1,3 million… so….. ….2,5 million of immigrant employments were created (2,2 coming from Non-DC) That means that 1 out of 2 new employments in Spain were taken by immigrants in Nowadays, around 15% of total employment is migrant employment. This average varies strongly depending on region (can reach 20%) and labor market sector (can reach 40%). CAUSES OF MIGRATION

SPAIN AS A CONTRY OF IMMIGRATION (3) Immigration policy design and evolution: Easy to enter as a “legal” resident or worker: Residence and working permissions works in a similar way that in the rest of Europe with any remarkable restrictions. Easy to enter illegally: Exhaustive frontiers control doesn’t exist. (no means, ¿no real interest?) Easy to live and work been illegal: Been illegal is not a penal crime but an administrative fault, it is very unlikely to be arrested and almost impossible to be deported. Public health and public education does not require legal status. Working without any kind of contract still been common, even for Spanish people (25% of informal economy) Easy to become legal once you are in Spain: There are regular ways of become legal after several years and, to some extent, there exists the thought that an amnesty process can arise (process is perceived 3 processes in the last 5 years. CAUSES OF MIGRATION

MIGRATION INTO SPAIN: Areas of Research ECONOMY RELATED MAIN SPANISH MIGRATION ECONOMY RELATED RESEARCH AREAS Evolution / Perspectives of Migration IN-Flows: future scenarios for Spanish “pull” factors and international “push” factors, Spanish / European migration policy role, international cooperation,.. Demographical challenges and im-migration Immigration and Labor Market: Participation (description, insertion / exclusion, segmentation,….) (**) Interaction with native labor market: unemployment, wages (Dual Market Vs Assimilation Vs “Damage”) Immigration and economic growth: (**) Macro Economic Impact: growth, welfare looses and gains, productivity, competitiveness Micro Economic issues: Patterns of consumption, investment, savings, remittances Public sector implications: Fiscal balance (migration “costs” and revenues), pension system sustainability

MIGRATION INTO SPAIN: Areas of Research MAIN PROJECTS ON MIGRATION OF OUR TEAM 6th- European FP ( ): Go-EUROMED, “An analysis of demographic changes in the euro Mediterranean region and migration movements in the EU” European Commission FEMISE Project ( ): “A dynamic long and short term approach to migration between MP’s and EU: demographical framework and the role of economic and social reforms” Madrid City Hall Government Agency (2005): Municipal Survey on Migration Consumption Patterns Madrid Regional Government Agency (2006): “Macroeconomic impact of immigration in Madrid Region” Spanish R+D Framework Program (2005): “Female immigration contribution to Spanish economic growth” Madrid Regional Government Agency (2007): “Survey on patterns of consumption, investment, savings, and remittances of migrants households in Madrid Region” Spanish Economic and Social Council ( ): “Migration implications in the long term scenarios for pension system sustainability and migration”.

MIGRATION INTO SPAIN: Areas of Research Macroeconomic impact of immigration in Madrid Region: Structure MIGRATION SITUATION DESCRIPTION AND DELPHI SURVEY Ramón Mahía – UAM MIGRATION IMPACT ON LABOR MARKET WAGES: Ramón Mahía – UAM / José Vicéns – UAM EMPLOYMENT: Eva Medina – UAM / Ainhoa Herrate - UAM MIGRATION IMPACT IN VALUE ADDED AND TOTAL EMPLOYMENT Rafael de Arce – UAM MIGRATION REMITTANCES ESTIMATION Pedro Chasco – UAM / Invención Hernández – UAM BUDGETARY IMPACT OF MIGRATION MIGRATION RELATED COSTS: Sofía García / Álvaro Salas – UAM HEALTH SYSTEM COSTS: Rafael Díaz-Regañón – SESCAM / Eva Medina – UAM EDUCATION SYSTEMS COSTS: Carmen Pérez - UAM

MIGRATION INTO SPAIN: Areas of Research Macroeconomic impact of immigration in Madrid Region: Main scheme DELPHI SURVEY ON 150 EXPERTS ON MIGRATION Estimations and characterization of illegal immigrants Calculation and characterization of TOTAL immigrants Calculation of Total IMMIGRANT SALARIES Hypothesis on illegal migration flows and stocks Hypothesis on illegal work of migrants Estimations and characterization of illegal immigrants workers SECONDARY DATA SOURCES Hypothesis on illegal MIGRANTS workers SALARIES Calculation and characterization of Total IMMIGRANT EMPLOYMENT Estimations and characterization of illegal immigrants workers salaries Value added impact by branches INPUT – OUTPUT GOSH MODEL Direct Effect on Production by Branches On Production On Value Added On Employment INPUT – OUTPUT LEONTIEF MODEL Total Production Effect by Branches Total Demand Effect by Branches Hypothesis on savings, remittances and consumption basket Net Disposable yield Direct Effect on Demand by branches On Production On Employment On Value Added

MIGRATION INTO SPAIN: Areas of Research Macroeconomic impact of immigration in Madrid Region – Main procedures and results No empirical evidence of relevant average impact on native wages or unemployment in the present economic situation (excess of labor demand) Nearly 30% of migrant workers are irregular (no working permission and/or no labor contract) Total migrant salaries account for nearly 4500 Millions euro (3.3% of Regional GDP) Nearly 1800 Millions of euro (1.3% of Regional GDP) are perceived by irregular immigrant workers Migration workers impulse to regional real GDP growth is around 3% cumulative in the last 5 years. For every 5 new migrant employments, a new native employment is needed in a direct or indirect way. The firm margins obtained by the migration added value impact accounts for Millions euro (4,9% of Regional GDP)

MIGRATION INTO SPAIN: Areas of Research Macroeconomic impact of immigration in Madrid Region: I-O Models Empirical Notes Advantages: Global estimation of direct and indirect effects taking into account the interlinks between sectors in the economy Wide range comprehension of economic impact chain: (employment, salaries, value added, production, savings, remittances, consumption, Branches, productivities,…). Results obtained by branches / sectors Put out different components of effects (production effect and induced demand effect) Limitations: I-O technical frame needed: lack of updating and, sometimes, low quality Coherent design of scenarios for a wide range of economic variables High sensibility in calibration of critical coefficients: inverse of productivity ratio, Margins over Valued Added ratio, external-domestic production, ….

CMR Seminar Warsaw – November 2007 Prof. Ramón Mahía – Rafael de Arce Applied Economics Department MIGRATION INTO SPAIN: Areas of Research