JRC Research on Migration Modelling · Competence Centre for Modelling, Task Force on Migration, Regional Economic Modelling DG Joint Research Centre European Commission Conference

JRC Research on Migration Modelling

d’Artis Kancs

Competence Centre for Modelling,

Task Force on Migration,

Regional Economic Modelling

DG Joint Research Centre

European Commission

Conference “EU and Global Asylum-Related Migration Research” EASO, Malta, 16 May 2016

The author is solely responsible for the content of the paper. The views expressed are purely those of the author and may not in any circumstances be regarded as stating an official position of the

European Commission.

Floriana, May 16, 2016 Migration research in JRC 2

Structure of presentation

Joint Research Centre of the European Commission

Migration research in JRC

Migration modelling in JRC

JRC's migration modelling example with the RHOMOLO model

Concluding remarks

• Institute for Reference Materials andMeasurementsIRMM – Geel, Belgium

• Institute for Transuranium ElementsITU – Karlsruhe, Germany

• Institute for Energy and TransportIET – Petten, The Netherlands

• Institute for the Protection and Security of theCitizenIPSC – Ispra, Italy

• Institute for Environment and SustainabilityIES – Ispra, Italy

• Institute for Health and Consumer ProtectionIHCP – Ispra, Italy

• Institute for Prospective Technological StudiesIPTS – Seville, Spain

•Established 1957

• 7 institutes in 6 locations

• 3000 staff in December 2015

•Budget: €374 million annually, plus€72.8 million earned income

JRC at a glance

Floriana, May 16, 2016 3Migration research in JRC

As the science and knowledge service of theCommission our mission is to support EUpolicies with independent evidence throughoutthe whole policy cycle.

To play a central role in creating, managing and making sense of collective scientific knowledge for better EU policies.

We are open and honest, innovative and accountable and treat everyone with respect. We offer opportunities for our staff to realise their potential.

JRC’s vision, mission and values

Floriana, May 16, 2016 4Migration research in JRC

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JRC is supporting political priorities of the Commission

Boosting Jobs, Growth and Investment

Connected Digital Single Market

Climate Action and Energy

Deeper and fairer Internal Market

Deeper and fairer Economic and Monetary Union

Free Trade Agreement with the US

Area of Justice and Fundamental Rights

New policy on Migration

Stronger Global Actor

Union of Democratic Change

Floriana, May 16, 2016 Migration research in JRC







Concluding remarks

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Enhancing EU’s Action on Migration – the role of the JRC

Support Europe’s more immediate actions on migration

Enhance the capacity of FRONTEX and Europol in border management through the JRC's work on internet monitoring, maritime risk analysis and technological solutions based on remotely piloted aircraft systems

Support better management of a legal migration and asylum policy

Help to improve EU’s underlying IT systems by means of the JRC's work on biometrics, digital identity management and smart card security

Support reducing incentives for an irregular migration

Establish an EU migration index that addresses the root causes of irregular migration and forced displacements in third countries as well as the pull factors in the Union


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Examples of JRC research projects on migration

Analysis of root causes, migration incentives and determinants, and map the diasporas

Socio-economic modelling to understand better the factors enabling migrant integration, and measure the impact of migration on health, welfare, education, well-being, or demographics

Analysis of human mobility scenarios at the EU and global level

Evaluation of measures and modelling of the impact of legislative proposals related to migration

Anticipate future demographic, economic and geopolitical trends, develop and test future scenarios, e.g. additional legal migration scenarios or integration issues and run simulations to measure their impact for the EU

Produce dynamic maps of migration flows for a trend analysis


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Examples of JRC research projects on migration (2)

Analysis of the migration and diversity impact on the economic growth using historical migration stock data

Analysis of differences in education outcomes (skills and qualifications) between immigrants and natives across different EU countries

Analysis of the relationship between school ethnic composition and student achievement across EU countries

Develop alternative scenarios for assessing likely push factors for Africa and Middle East by combining demographic projections with assumptions on different stresses that trigger migration (e. economic, environmental)

Dynamic mapping of conflicts worldwide as a key factor for migration

Analysis of legal migration by taking into account future needs of the EU labour market as an asset for the EU economy

Analysis of pull factors based on four-dimensional model of EU population dynamics (age, sex, education and participation) aiming at integration


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Examples of JRC research projects on migration (3)

Develop an EU migration inclination index based on derivation of relevant indicators and statistical modelling on available data on root causes of migration and forced displacement

Analysis of the climate change as driver of an international migration

Analysis of the role of education and other factors for the integration of migrants in the EU

Modelling longer term migration flows into the EU on the basis of gravity and spatial interaction models

Assessment of the short- and medium-term macro-economic and labour market impact of the refugee crisis


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JRC's Task Force on Migration

To further strengthen its support to Commission services in their response to the management of the refugee crisis specifically and migration generally, in 2015 the JRC established a Task Force on Migration

The TF on Migration aims to support the migration-related work of Commission services with independent, evidence-based scientific support

In 2016 the JRC's Task Force on Migration grows into a Commission-wideKnowledge Centre on Migration and Demography


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Knowledge Centre on Migration and Demography

Launch of the European Commission's Knowledge Centre on Migration and Demography in Brussels, Berlaymont, on 20th June 2016

The KC on Migration and Demography will be hosted by the JRC

Internal stakeholders:

DG Migration and Home Affairs

DG Humanitarian Aid and Civil Protection

DG Research and Innovation

European Political Strategy Centre (EPSC), and others

External stakeholders:

International Institute for Applied Statistics Analysis (IIASA)

International Organisation for Migration (IOM), and others


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Knowledge Centre on Migration and Demography (2)


Governance structure:

Steering Group provides strategic direction

Core Team assures execution of the action plans

Main activities:

Building the evidence base, conducting analysis and foresight

Exploiting the knowledge base and facilitating uptake by stakeholders

Partnerships and networking to extend the knowledge base

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Policy-oriented Research and Evidence-based Analysis

Dynamic information hub that provides a continuous situational awareness on migration (e.g. new routes, smuggling/trafficking networks, social unrest) to improve the anticipatory and preparedness of EU institutions

Socio-economic modelling, qualitative and quantitative analysis and foresight to improve the understanding of the role that certain factors (e.g. education) play in the integration of migrants, impacts of migration on the human capital, economy and well-being in the EU

EU migration index to inform EU actions aimed at reducing the incentives for irregular migration

Studies and workshops on topics of relevance to policymakers at national and EU levels to meet both their short and long term information needs


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Observatories and Partnerships

Improve accessibility to relevant knowledge on migration flows into, and within, the EU and population movements linked to crises and other factors by means of a pilot European Migration Observatory

The Observatory will be established and maintained by the JRC on behalf of the European Commission

A close cooperation with the European University Institute in Florence and the European Migration Network will be forged

Liaise with, and pool knowledge from, the existing competent nationaland/or international bodies


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Capacity Building

Strengthening the EU border management capability through improving its main underlying IT systems (Schengen Information System, EURODAC , the Automated Border Control system underpinning Europe’s revised Smart Border initiative) and the Blue Card scheme

Capacity building of affected third countries, particularly in Africa, through making available JRC in-house tools and knowledge for enhanced maritime situational awareness

Support the EU and national authorities active in the EU Hotspots through providing enhanced biometrics for fingerprinting incoming migrants








Concluding remarks

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Types of migration models

Migration forecasting models

Attempt to predict migration flows based on the current situation and expected future developments

Ex-post and ex-ante impact assessment models

Attempt to assess socio-economic impacts of a policy action or a change in the external environment, e.g. the Syrian Civil War

The JRC's focus of migration modelling activities is on both forecasting and impact assessment of migration (policies)

Impact assessment models are particularly relevant in the context of migration policy preparation / revision



Why models for impact assessment?

Direct and indirect effects

Migration (policy) induces changes in relative prices on input markets (e.g. downward pressure on low-skill wages) and output markets

Relocation of labour between economic sectors and countries

Short-run and long-run impacts

E.g., a refugee integration policy boosts demand for goods, services and production factors in the short run, e.g. through public demand

Increases labour market participation in the long-run

Confounding factors coinciding with EU migration policy interventions

Internal policy actions, e.g. national migration policies

External developments, e.g. civil wars in third countries


Why models for impact assessment? (2)

Because of these complexities, the specific impact of migration and migration policies cannot be identified by simply looking at data

In order to capture all direct and indirect, short-run and long-run effects of migration (policy) and assess the impact which can be attributed to it, one has to compare a simulation of the economy as if migration (policy) was absent with one which includes migration (policy)

This exercise generally requires the use of macroeconomic models, which can simulate both the baseline scenario (which we do not know) and counterfactual (with alternative policies) scenarios

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Impact assessment in the policy cycle








Concluding remarks


Modelling framework

In the present analysis we undertake scenario simulations and analysis using the dynamic spatial general equilibrium model RHOMOLO

RHOMOLO is a micro-economically founded macroeconomic modelrooted in three strands of economic theory: general equilibrium, semi-endogenous growth and new economic geography

Channels of labour market adjustments

Participation, unemployment, education, migration, wage adjustments

Three skill levels: low-skill, medium-skill and high-skill

Geographical coverage

All EU Member States at the NUTS2 regional level

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Simulation of alternative policy scenarios

Low integration scenario: the current level of integration

Assume the current level of government expenditure on refugee integration into labour markets, and the current level of refugee employment rate (low-, medium-, high-skill)

Partial integration scenario of admitted refugees

Assume an increase in the current integration expenditures, implying higher than the current employment and participation rates of refugees

Full integration scenario of admitted refugees

Assume an increase in integration expenditures to achieve comparable professional and language skills to natives, and the same employment and participation rates as of natives


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Scenario assumptions: scenario-uniform public costs

The inflow of asylum seekers raises public expenditure, implying a negative effect on public budgets in the short-run

During the application procedure, asylum seekers benefits include accommodation costs, healthcare costs, in-kind benefits, cash benefits, ..

In addition, successful applicants will have access to welfare benefits, and increase costs of public administration, childcare and education

No reliable estimates on public expenditure for accommodating and integrating refugees, the German Council of Economic Experts estimates an overall public cost of around 0.5% of GDP in 2016 and 0.75% in 2017

EUR 800 per asylum applicant

EUR 6600 welfare benefits per year for successful applicants

Not accounted for: additional public administration costs


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Scenario assumptions: scenario-specific integration costs

Two types of integration costs that are different between scenarios are assumed for refugees:

Language training costs

Upper secondary, professional and/or tertiary education costs

Language training costs

National data

Language training costs are Member State-specific, e.g. EUR 2000 per year per successful applicants in Germany in the baseline scenario

Upper secondary, professional and/or tertiary education costs

Eurostat data (educ_uoe_fine09)

Education costs are Member State-specific, they range from 1789.8 EUR/student/year in Romania to 33525.9 EUR/student/year in Denmark


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Preliminary results of RHOMOLO simulations

Permanent growth effects depend strongly on the level of refugee integration

Higher levels of refugee integration are more costly for public budget, however, benefits more than outweigh costs

The key channels of adjustment are:

Short- to medium-run increase in public expenditure

Increase in private consumption

Medium- to long-run increase in labour supply

Medium- to long-run increase in government revenue

Medium- to long-run increase in GDP

Growth effects depend strongly on the way how the additional public expenditure is financed


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Preliminary results of RHOMOLO simulations (2)

Economic growth will be boosted by additional public spending for refugees

Government spending to host refugees in reception centres and during the asylum application process will have an immediate positive impact on real GDP growth

In addition, language courses and professional training will boost public consumption in the short- to medium-run

The net growth effect depends on the way how the additional public expenditure is financed (additional taxes, national budget relocations, EU budget relocations, public borrowing..)


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Private consumption and government expenditure for integration measures rise gradually along with the number of accepted asylum applications

Welfare benefits will increase the aggregate disposable income of households

Housing, clothing, and furnishing needs will directly feed into private consumption

Again, the net growth effect depends on the way how the additional public expenditure is financed


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Accepted and trained asylum seekers will gradually become available for the labour market, increasing labour supply

The share of refugees at working age (15-74) is assumed at 75%, following common estimates in literature

Language knowledge and professional skills (both level and profession) will determine how quickly they will become employed, until the acquaintance of necessary skills, no impact on the labour supply

In the short- to medium-run, most refugees will enter low-skill jobs

The rise in the labour force due to increased migration will have a positive effect on growth in the medium- to long-run

Depending on complementarity of refugee skills, immigration will exert a downward pressure on wages

Competitiveness, demand and hence production of goods will increase


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In the medium- to long run the fiscal impact of refugees will be positive

The inflow of asylum seekers will increase public revenue gradually over time, implying a positive effect on public budgets in the long-run

Immigration will have a positive impact on public revenue due to higher indirect tax revenue and, as the integration of the immigrants into the labour market advances, increasing revenue from payroll taxes and social contributions








Concluding remarks

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Concluding remarks

Migration offers opportunities and leads to impacts on Europe’s resilience (economy, human capital and well-being)

To fully exploit the benefits of migration and to mitigate its adverse aspects, the EU must develop a deeper knowledge and understanding of it

Enhancing EU’s capability in implementing a policy on migration and being better prepared for future challenges requires timely access to the relevant knowledge and evidence-based research

Meeting these expectations implies overcoming several challenges includingpoor data, inadequate models, insufficient information sharing, inaccessible, non-comparable and fragmented knowledge, networks and activities across Europe


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Additional slides


Brussels, May 12, 2016 DG AGRI 35

References to the RHOMOLO model

Kancs. D. et al (2016)."Long-term socio-economic and fiscal effects of immigration into the EU: The role of the integration policy", JRC Technical Report JRC101816, European Commission.

Ciaian P. and Kancs, D. (2016), "Assessing the Social and Macroeconomic Impacts of Labour Market Integration: A Holistic Approach", JRC Technical Report JRC99645, European Commission.

Brandsma, A., Kancs, D., Monfort, P. and A. Rillaers (2015). "RHOMOLO: A Dynamic Spatial General Equilibrium Model for Assessing the Impact of Cohesion Policy", Papers in Regional Science, 94.

Brandsma, A., Kancs, D. and D. Persyn (2014). "Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO", Journal of Economic Integration, 29.

Documents

JRC Research on Migration Modelling · Competence Centre for Modelling, Task Force on Migration, Regional Economic Modelling DG Joint Research Centre European Commission Conference