Brain Gain: A European approach
(Bocconi University and Fondazione RODOLFO DEBENEDETTI)
Europe in the Global Competition for Talent
7th Munich Economic Summit
5-6 June 2008
Immigration contributes to economic growth in the recipient country insofar as it increases the share of skilled workers in the population. By increasing its per capita human capital endowments, the immigration country can support stronger growth rates, rather than simply experiencing a once-for-all increase in GDP. Europe so far has been lagging behind the US in its capacity to attract skilled workers, notably from non-EU countries. Some brain-gain (and brain-drain) would seem to have occurred mainly within the new borders of the Union, in relation with the Eastern Enlargement of the EU.
Increasing the skill content of migration to Europe requires much more than simply adjusting migration policies. It also involves the design of labour market institutions, notably collective bargaining systems. Countries with centralized wage setting institutions and large excess coverage rates typically generate compressed wage structures, decreasing the attractiveness of their labour markets to the highly skilled workers. Centralized wage setting also reduces the links between productivity and wages imposing automatic adjustments of earnings to seniority in a firm, rewarding relatively long tenures. This prevents young and talented migrants from obtaining relatively high wages at short tenures and makes job-to-job shifts (typically higher among migrants) more costly.
Starting from the late 60s a growing number of countries have adopted immigration policies specifically aimed at selecting and attracting a highly skilled labour force. However, there is no coordination of these policies across the EU. This means that the EU is not a large and unified labour market for highly skilled non-EU workers. Ph.D students in a given EU country going to a conference in another EU country need to apply for a visa. A co-ordinated approach at the EU level would significantly increase the attractiveness of Europe to highly-skilled workers. Such a coordinated policy need not to impose the same rules in all countries. For instance a selective migration policy, based on a Points-based System, may well involve different criteria in allocating points at lower skill levels depending on national (or local) labour market conditions.
For skilled migration to exert significant and positive spillover effects in the country of destination, migrants should also be rapidly assimilated. This allows skilled migrants to transfer their human capital to natives, enriching their culture with a different approach to problem solving, while possibly acquiring themselves more human capital via interaction with local colleagues. Unfortunately, Europe is lagging behind the US also in this respect.