Dr. Tina Haisch, Economist, BAK Basel Economics GA 2008 Assembly of European Regions (AER) Open Space – International Speaker‘s Corner Nov 13th 2008, Tampere Migration: Building regional advantage

Who is BAK? Why is it important to talk about migration? Business climate vs. People‘s climate Concept Migration and economic development Research questions Method Econometric analysis Conclusions Content

BAK Basel Economics: Independent economic research Swiss economic research & consultancy institute Staff: 35 (thereof 19 economists) Economic data, analysis and consultancy for countries, regions and industries Benchmarking, forecasts, research projects (e.g. statistical/econometric analyses, SWOT analyses, elaboration and evaluation of regional visions and strategies) Analytical work based on BAK’s vast performance (Gross value added at current, constant prices as well as industry specific purchasing power parities, employment, hours worked, output per man hour,labour cost and unit labour cost (30 variables)) and location factor database (Indicators for regulation, taxation, innovation capacity, accessibility etc.)

Regions - Not Only Countries Business Sectors – Not Only Macro Level Time series for 800 regions in 24 countries NUTS1 to NUTS3 45 industry sectors (NACE). In selected industries more details (Life Sciences, Finance, Technology, Tourism) Countries Regions

Migration: Building regional advantage

In recent years the effects of migration, expressed through research questions like do people follow jobs (does employment drive population changes) or do jobs follow people (does population drive employment changes) on regional economic development have gained considerable interest among researchers, politicians and economic actors. -> empirical results (nature of causality) differ a lot across space and time -> a meta analysis conducted by Hoogstra et. al in 2005 compared the results of 37 studies from 1987 to They found empirical evidence for the hypothesis „jobs follow people“ -> Furthermore they found out that the chosen regions/countries and time periods have major influence on the results Building regional advantage

Building regional advantage: Business Climate vs. People Climate Business climate: Economic performance, the development of Clusters and Regional Innovation Systems are based on the creation of localisation economies as well as on other factors (company taxation, regulation etc.) People’s climate: Focusing on quality of life, taxation, diversity, creativity and tolerance emphasizing urbanisation economies. Such an environment attracts talents which in turn attract and generate innovative, knowledge-based economic activity Silicon Valley, CA, USA Cologne city beach, Germany

Quality of Life Concept: Explaining employment and economic performance Migration Governance Innovation Regulation Accessibility Taxation Economic performance of regions

Interaction between migration and economic growth Migration Students Alumnis etc. Refugees Asylum seekers etc. Migrant labour Expatriates etc. Political attractiveness Economic attractiveness Other attractiveness Attractiveness of regions and countries Stability Institutions (laws, immigration policy etc.) Accessibility Quality of life etc. Performance Employment Taxation GDP Employment (jobs) Attractiveness of regions and countries Taxation Regulation Productivity Job vacancy Quality of life Innovation resources etc.

1.Is economic performance the driver of migration or is migration the driver of economic performance? 2.Do people follow jobs or do jobs follow people? Questions to be answered with regard to regional advantage

sample for empirical analysis: 40 metropolitan regions in Europe and the US 26 years (1980 – 2006) methods employed: - Simple correlations - Correlations (with time leads and lags) to show the time structure - Granger (1969) causalities for testing the significance of correlation Simultaneous testing for the equations: (1) y t = a 0 +a 1 y t–1 + … +a l y t–l + b 1 x t–1 + … + b l x t–l +e t (2)x t = a 0 +a 1 x t–1 + … +a l x t–l + b 1 y t–1 + … + b l y t-l +u t F-test with null hypothesis b 1 = b 2 = … = b l = 0 assumptions: natural population changes are similar across the investigated metropolitan regions therefore migration can be estimated by population changes Method Source: BAK Basel Economics

Relation of economic performance and people Source: BAK Basel Economics

Relation of jobs and people r = 0.52 Source: BAK Basel Economics

Economic performance and employment (jobs) Economic performance today affects employment growth today Economic performance affects employment growth one year later Source: BAK Basel Economics

Economic performance and migration Migration today results from economic growth in the last 4 years. Source: BAK Basel Economics

Employment and migration Migration today results from job growth in the last 4 years (people follow jobs). Source: BAK Basel Economics

Until now it seems that… –GDP growth today leads to job growth one year later –GDP growth today leads to migration (population growth) up to 4 years later –employment growth today leads to migration (population growth) up to 4 years later

after testing for significance (Granger causality): 1. Is economic performance the driver of migration or is migration the driver of economic performance? -> Economic performance is the driver of migration! 2. Do people follow jobs or do jobs follow people? -> In the short run: people follow jobs -> but in the long run jobs also follow people Source: BAK Basel Economics

Conclusions: Lessons learned from the data Employment Growth Population Growth = Migration Economic Growth effects with a time lag of ~ 1 year effect with a time lag of ~ 4 years Employment Growth effects with a time lag of ~ years

Conclusions: Lessons learned from the data ►Migration is an important factor for economic success and for regional advantage! ►Economic growth is the catalyst for job growth and migration ►But: Causality is directed forwards and backwards!

What should regional actors take into account? ►Therefore: The construction of both, business climate and people’s climate are very important for the economic success of a functional region! ►Most regional actors focus mainly on attracting companies and improvement of business conditions -> business climate ►But: For sustainable long-term regional growth, people‘s climate is as important!

Thank you very much! Economist Dr. Tina Haisch Contact BAK Basel Economics Gueterstrasse 82 CH-4053 Basel Tel Fax