Why Spain’s and Italy’s pain could be Germany’s gain

You might call it migration schadenfreude. As Europe’s economy falters, immigrants are streaming into Germany. And that’s happening just as Germany is confronting an acute shortage of labor. This tide of immigrants is a relatively new thing for the country. The difficulty of mastering German and the perception of administrative hurdles, among other factors, had kept the country’s immigration rate the lowest among Europe’s advanced economies.

But after staying flat between 2006 and 2009, immigration to Germany jumped 40% in 2011 to total 840,000, increasing another 15% year-on-year in the first half of 2012, according to a paper (pdf) published last month by Spain’s Foundation for Applied Economic Studies.

Of course, Germany is Europe’s largest national economy and has fared much better than almost all of its European peers since the onset of the financial crisis. After shrinking 5% in 2009, the German economy has seen year-on-year growth since then (albeit just an estimated 0.7% in 2012). Its fellow euro area countries, meanwhile, have battled recessions.

But the spike in immigration to Germany is not simply due to people fleeing their ailing economies. Most of the double-digit increase observed by the authors of the report was from migrants in the European Economic Area (the 27 EU member states plus Iceland, Norway, and Liechtenstein). And, remarkably, 78% of that jump was the result of what migration researchers call the “diversion effect.” That is, about 200,000 workers chose to go to Germany instead of migrating to places like Italy, Spain or the United Kingdom. Here’s a look at that trend:

This chart shows gross inflows into Germany between 2006 and 2011"The European Crisis and Migration to Germany: Expectations and the Diversion of Migration Flows," published in FEDEA

The authors, Simone Bertoli, Herbert Brücker, and Jesús Fernández-Huertas Moraga, explain how the diversion effect has played out in Germany:

Thus, during this period, immigration between a typical European country and Germany is explained to a much larger extent (twice as much) by changes in conditions in alternative destinations, typically Italy, Spain and the United Kingdom, than by changes in conditions in that particular country. For example, the surge in Romanian migration to Germany has much more to do with the Spanish economic situation than with the German or Romanian economic situation.

In other words, Germany didn’t get a bunch of Romanian workers simply because the economy was bad in Romania and better in Germany. Rather, migrants who would otherwise have headed to Italy or Spain opted for Germany instead, put off by the grim work opportunities in southern Europe. (Spain and Italy absorbed the highest number of migrants from Romania and Bulgaria before 2008, the authors note.)

Plus, for many of these migrants, the economy wasn’t all that bad at home. The majority of these laborers come from eastern Europe, which has generally suffered less than the economies of southern Europe. For example, even as Romania’s GDP per capita and unemployment levels stayed relatively stable, the researchers observed that Romanian migration to Germany increased five-fold between 2006 and 2012, at the same time that Romanian migration to Spain fell three-fold.

These eastern European countries have been exporting migrant labor to other European countries for a long time. As Bertoli et al. observed, more of them are now just heading to Germany.

READ ENTIRE ARTICLE HERE: http://qz.com/53636/why-spains-and-italys-pain-could-be-germanys-gain/

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