Understanding free movement and migration in the European Union
Impact of migration on wages
The impact of migration on wages has always been a highly contested and polarising subject. Impacts will differ from country to country, depending on the sort of labour market regulations that are in place.
The REMINDER project’s analysis highlights that the key difference is between ‘liberal market economies’ (LMEs) such as that of the UK, and the ‘coordinated market economies’ (CMEs) typical of many Scandinavian countries.
In LMEs, hiring and firing low-skilled migrant workers is relatively easy, which keeps production costs down and prices low. It also depresses wages (at least in the short run) at the bottom end of the labour market.
In coordinated labour markets we tend not to see this effect as much, and migrants are more likely to be paid at the established wage for that profession.