Migrant Diversity and Regional Disparity in Europe

An important question in Europe at present is to what extent diversity among migrants – in terms of demographic and socio-economic characteristics and capabilities – contributes positively to economic welfare and development, and to what extent diversity influences inter-group and spatial socio-economic disparity. This project assesses how the scale and diversity of migrant populations affect socio-economic outcomes. Since migrants disproportionally settle in certain regions and particularly in certain metropolitan areas, the analysis is conducted at the regional level. However, implications for national welfare and policy within a pan-European political economy framework are also considered.

The growing diversity of the population through immigration may affect the host economy through different channels and the net impact depends on the strength of these effects, which the project aims to measure. Workers with different cultural backgrounds represent complementary skills, problem-solving abilities, ideas and aspirations. They also form various networks. The interaction of these workers with the host population increases productivity due to knowledge spillovers or other forms of positive externalities. However, when the variety of the backgrounds is too diverse, fractionalization may imply excessive transaction costs for communication and therefore lower productivity. Moreover, diversity may also influence subjective wellbeing of individuals in positive or negative ways.

This project adopts an ambitious and innovative research design that tackles the interaction between migrant diversity and regional disparity at four different levels: (1) Theory building, informed by micro-simulation and meta-analytic assessment; (2) Meso-level (pan-European, bilateral and sub-national) analysis of migrant diversity and regional disparity;(3) Comparative dynamic micro-level analysis of migrant diversity and individual wellbeing; and (4) Policy-level analysis of the role of immigration policy, institutions and the welfare state on international migration impacts.

The project is conducted by researchers from five European countries: Estonia, Finland, Germany, Netherlands and United Kingdom. These countries offer an interesting variety for empirical contrast analysis – in terms of population and economy size, migration flows and composition, and differences in migration policies and welfare systems. A strong focus is on the study of East-West migration patterns (brought about by EU enlargement). However, a comprehensive pan-European analysis will also be conducted which uses the European Labour Force Survey (EU-LFS) that offers individual and household data that are comparable across the 27 Member States of the European Union. A case study that uses very detailed sub-national data for Germany is also conducted. For the European-wide micro-level analysis two major European surveys are used: the European Union Statistics on Income and Living Conditions (EU-SILC) survey and again the European Labour Force Survey (EU-LFS). At this level, a case study is also conducted, namely of Estonian migration to Finland, linking Finish and Estonian micro data on such migrants.

The project aims to improve understanding of the impact of cross-border population flows into, within and out of Europe on regional socio-economic development and disparity. The results may help design the social safety net, the education system and the structure of taxation in an efficient and just way in the presence of increasing streams of diverse migrants. Finally, the findings may aid the formulation of policies to improve the balance in migration flows with respect to skills, entrepreneurship, family reunification and international obligations.