Epa Sem 2 Group Project
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EPA SEM 2 Group Project Notes (to be continued): Why Move? 1. Pull Factors: ∙ Higher Wages (GDP per capita was (US)$12,700 vs. UK (US)$30,900) ∙ Purchase Power Parity ∙ High demand for skilled/semiskilled manual labour workers ∙ Polish Resettlement Act 1947 2. No Barriers to Entry / Exit Poland joining the EU in 2004 UK is one of 3 member states that allows immediate migration and work from any other EU state 1st generation Polish struggled to make ends meet and have a better life by emigrating, leaving family behind. 3. Push Factors: ∙ Average unemployment in Poland was 18.5% in 2005 now averaging 12% since 2008 ∙ Rural unemployment in some areas of over 40% Remittances: At over US$8 billion in 2011, Poland was the 17th largest recipient of remittances.
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Polish Plumber Plan
Transcript of Epa Sem 2 Group Project
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EPASEM2GroupProjectNotes(tobecontinued):
WhyMove?
1.PullFactors:
HigherWages(GDPpercapitawas(US)$12,700vs.UK(US)$30,900)PurchasePowerParityHighdemandforskilled/semiskilledmanuallabourworkersPolishResettlementAct1947
2.NoBarrierstoEntry/ExitPolandjoiningtheEUin2004UKisoneof3memberstatesthatallowsimmediatemigrationandworkfromanyotherEU
state1stgenerationPolishstruggledtomakeendsmeetandhaveabetterlifebyemigrating,
leavingfamilybehind.
3.PushFactors:
AverageunemploymentinPolandwas18.5%in2005nowaveraging12%since2008Ruralunemploymentinsomeareasofover40%
Remittances:AtoverUS$8billionin2011,Polandwasthe17thlargestrecipientofremittances.
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PolandsaccessiontotheEuropeanUnion(EU)in2004coincidedwithaneardoublingofthevalueofremittancesinasingleyear(fromlessthanPLN9billionin2003toalmostPLN17billionin2004),followedbycontinuedincreasesofpockettransfers.ThevalueoftheseprivatepaymentssignificantlyoutweighedtheconsiderablevalueoffundscommittedtoPolandbytheEUunderitsvariousstructuralandcohesionprogrammes.Moreover,during2005,thevalueofprivateremittanceswasfivetimesgreaterthattheinflowofEUfunds.And,duringthesubsequentfewyears,theyremainedconsiderablyhigher.WlodzimierzWolski,psychologistanddirectorofRadoms(towninPoland)CentreforCrisisIntervention,statedthathismostrecentEuroorphanscaseinvolvedtwoteenagedaughtersleftinthecareoftheiroverwhelmedgrandmotherwhiletheirmotherandfatherwenttoLondontoworkasadishwasherandaconstructionworker.Justtwodayslaterthemotherhadreturned.ThefatheriscontinuingtoworkonaUKbuildingsiteandtosendmoneybacktohisfamily.
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NegativeSelectionbiasItsthelowskilledjobsthatareinahigherdemandinGreatBritainnotthehigherskilledjobs.
ThemajorityofthePolishtooklowskilledjobs.However,astheysettledownandhavechildren,thenewgenerationareusuallymorehardworking,andenterprising,thattheyarenowoverqualifiedforthejobstheireldersusedtotake,andrunsuccessfulbusinesses.
ReturnstoSkills:BritaintoPoland(andotherA8migrantnationalities)returnstoskillsismoresymmetricalincomparisontononEUimmigrants.Thisisduetothefreerighttoworkwithoutavisa.TheonlymaintransferexpensewouldbethemoneyitcoststotravelfromPolandtotheUK.
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NetFiscalImpact:
Thenetfiscalimpactofimmigrationrepresentsthedifferencebetweenthetaxesandothercontributionsmadetothegovernmentbythemigrantsminusthecostsofpublicbenefitsandservicestheyreceive.
Duetothemanyfactorsthatplayarole(andthecomplexityoftheissue)itisdifficulttopreciselyestimatethenetfiscalimpactsofimmigration.
In all years (2005-06-2008-09), the ratio of tax receipts to expenditures for A8 immigrants was well above 1 (see table below), indicating that A8 immigrants paid substantially more in taxes than they received in government assistance. The figures in the Table suggest that the A8 contribution to taxes was over 35% higher than the amount received in direct or indirect government transfers.
Theycouldalsohavemoreofapositivefiscalimpactdueitsinfluenceonthereductionofthedependencyratio(peopleofworkingagewhoworkandpaytaxes/peoplewhodontworkanddontpaytaxesorarenotofworkingage)
.PolishimmigrantsdonotdependonsocialbenefitscomparedtotheirBritishcounterparts.
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LabourMarketModelofImmigration:DemandEffects:
Mostregisteredimmigrantsareagedbetween18and34 Thismeansthatformajorityoftheirworkinglifetime,theywillbe
contributingtotheUKeconomyandpayingtaxes Youngerimmigrantsarealsolikelytostartfamilyinthedestination
country,whichwouldgeneratemoredemandforgoodandservicesinthedestinationcountry.
Asaresult,creatingmoredemandoflabour
Insourcecountry(Poland)anddestinationcountry(UnitedKingdom):
Thegaininnationalincometocapitalownersiscalledtheimmigrationsurplus. TheorysuggestsPolishimmigrantsincreasenationalincomebymorethanitcoststo
employthemintheUK. ThearticlecitestheexampleofTomazDyl,animmigrantwhostartedhisown
businessandhasboughtahouseintheUK.Thisservesasanapplicationofdemandeffectsinourmigrationmodel.Polishimmigrantsarenotonlyenteringtheeconomyasworkersbutalsoasconsumers.Asaresult,theequilibriumwagedoesnotdropasmuchasitotherwisewould.
Overall,thearticlesuggeststhereisahighdemandeffectasaresultofthehighlevelofPolishimmigration.
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THISwillcreateseveralimplications:Lowwagestatesmovetohighwagestatesandviceversaandlevelitout.Economicforcesthatcreatewagedifferencesillalsocreatemigration.Inthiscase,therewashighunemploymentinPoland,andhigherwagesinUK(despiteitslowskilledjobs)duetoMinimumWagelawsinUKandstrongercurrency(PoundVSEuros)andhigherGDPinUK.ThusImmigrationwillcreatewinnersandlosers(mostlywinners):
WorkersthatstayedinPolandwillWIN(wageshigher)asapartoftheirpopulationleave,andsupplyofworkersfallandthuswagesforPolesthatstaybehind.
WorkersthatmovefromPolandtoUKwillWINaswell(wagesgethigherforthem).Capitalistsandbusinessownerswillhavetopartalargerportionoftheirearningsandwageswillfallslightly,accordingtohowmuchSupplyincreases,andtheELASTICITYoftheVMPL,butwagesarestillhigherthaniftheystayedinPoland.
CapitalistsinUK,aftermigration,willWIN.Theirshareofprofitsarelarger. TheonlyLOSERSarePolishCapitalists,whowillhaveasmallershareofprofits.
However,theycouldgaininhigherGDPandRemittancesbacktoPolandoverthelongrun.
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Conclusion/OverallThoughts:1. FreeridingontheexistingcohesiveUKinfrastructureofgoodeducationsystemand
soundeconomicbackdrop,somigrationbegan.2. PatentCitations:academicswhoaretornbetweenontheissueonimmigration,will
stronglysupportandinfluenceeachothersstandinfutureresearch,makingitbiased.3. BraindrainoccursonPolandofthe2ndgenerationofPoleswhodonotintendtogo
backtoPolandatall.However,remittancescanreducethenegativeeffectsofbraindrain.AlsowillmotivatePolishpeopleinPolandtogetbettereducation,improveeducationstandard,etc,toimproveinfrastructure.
Then,ifenougheducatedpeoplestaybehindinsteadofmigrating,therewillbeabraingain.4.Globalimmigrationconsensusisthatimmigrationisbeneficialforall.Howeverforthiscase,itmaybetoostrainingasitistooacceleratedforcohesion,suchthatUKIPLeaderNigelFaragehasbeenvyingforstronglyregulatedimmigrationlawsfortheUK.Sources:Telegraph(2013).WhyPolesLoveComingToBritain.http://www.telegram.co.uk,Web,viewed12thMarch2015Dustmann,Frattini,Rosso(2012).TheEffectofEmigrationfromPolandonPolishWages.J31,J61,p4950
TheGuardian(2015).AsPolandlosesitsdoctorsandbuilders,Euroorphansareleftathometosuffer.http://www.theguardian.com,Web,viewed12thMarch2015WesternUnion(2012).Theeconomicbenefitsofremittances:AcasestudyfromPoland.CentreforSocialandEconomicResearch,Warsaw,p16(3)BBC(2011).EasternEuropeanmigrants'add5bn'toBritain'sGDP.http://bbc.co.uk,Web,viewed12thMarch2015
TheGuardian(2014).TenyearsonandPolesaregladtocallBritainhome.http://www.theguardian.com,Web,viewed12thMarch2015
