Interdependencies between agricultural and labour markets

This study observes the interdependencies between labor migration and the integration of ten new Member States in the EU’s CAP in the course of the EU Eastern enlargement. Despite the already generally high degree of regional integration agriculture and labor migration represent the two aspects, which are still characterized by a high level of protectionism between the EU-15 and the acceding CEECs. Agricultural trade is still hampered by various import tariffs while at the same time the immigration of workers from the CEECs is subject to certain border restrictions. Thus, with the abolishment of such restrictions and a deeper integration involving the adoption of various EU policies by the CEECs, e. g., the CAP, both agricultural production as well as migration pattern are assumed to experience significant changes. Thereby it can be further assumed that there exist strong interdependencies between agricultural markets and labor migration. Thus, with structural adjustments occurring in agriculture labor markets and therewith labor migration will be affected. With this background for the quantitative analysis of the respective interdependencies the methodological instrument chosen is the multi-regional and multi-sectoral CGE model GTAP. The theoretical and empirical framework of this model fulfills the main requirements for such an analysis, such as trade links, detailed depiction of the agricultural sector, country coverage, link between product and factor markets etc. For the examination of changes regarding bilateral labor migration flows the standard model framework was extended with a migration mechanism including an immigration quota to mimic the restrictive immigration regime applied by some EU-15 countries. The regional focus is given to Poland and Germany. The results show that the CAP integration has a mitigating effect on migration movements from Poland to Germany, particularly concerning trade liberalization with respect to processed animal products. Regarding the characteristics of the trademigration link the study finds that a diminished migration flow from Poland to Germany causes Poland’s export performance to Germany to decline at the same time. This reflects a complementary relation between trade in goods and interregional labor movements. With respect to the development of agricultural output the results reveal a stronger production performance in the case of increased immigration into Germany, while production is weakened in the according migrants’ home countries.