WORKFORCE MIGRATION AND ITS EFFECTS ON EDUCATION OUTSOURCING: THE CASE OF

ROMANIAVictor-Bogdan OPREANDiana-Mihaela POCIOVĂLIŞTEANUAdina POPOVICI

New Directions in WelfareParis, 6-8 July 2011

Sustainability in the Social Security Systems (SSS)

Types of Social Security Systems considered:

Self sustained/sustainability (self sustained, system, systemic)

inputs – processes – outputs

= Collect –> Invest –> Benefits –> Distribute

Welfare

= Collect –> Distribute(Rom.)

prot

ectio

n

insu

ranc

e

New Directions in WelfareParis, 6-8 July 2011

Sustainability in the State Social Security System

(SSSSS) focus: Romania, public pension “fund”

V (W (professional training/edu. t-1, t-2, … , t-k))

education/knowledge, information

System? – sub-system, supported

economic growth (endogenous, Keynes)

New Directions in WelfareParis, 6-8 July 2011

educ.

cons.

fiscality

prod.

eviction

migration

EU15,Wwide

continued, Sustainability in the State Social Security System (SSSSS)

focus: România, public pension “fund”

New Directions in WelfareParis, 6-8 July 2011

migration

MIGRATION: COST? BENEFIT?

continued, Sustainability in the State Social Security System (SSSSS)

focus: România, public pension “fund”

migration

New Directions in WelfareParis, 6-8 July 2011

MIGRATION: COST

Romania & EU15

MODEL:

100ConsTxRate Cons

100LbrTxRate EarnRo 1000

EmplRolExpEduRoTt Emigr cost Migration

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

New Directions in WelfareParis, 6-8 July 2011

Yr.of obs.cost elem.

7 6 5 4 3 2 1

GDPRo 230,150.10 251,307.30 223,380.90 195,837.60 170,040.30 160,176.10 141,043.90GDPEU15 10,321,478 10,971,654 10,948,450 10,388,429 9,860,497 9,472,944 9,061,233ExpEduRoTtl 10,801.73 9,486.10 7,956.93 5,910.40 5,249.30 4,859.80 4,604.30EmplRo 9,569.30 9,410.40 9,267.20 9,330.70 9,364.80 9,365.90 9,174.80Emigr 5,792.25 4,321.00 5,792.25 5,792.25 6,346.00 7,179.00 5,323.00EmplEU15 137,344.80 138,478.30 139,791.10 142,095.50 144,653.80 145,725.90 143,042.10EarnRo 7,944.70 6,833.60 5,953.80 5,639.80 4,930.30 4,802.80 4,722.90LbrTxRate 29.50 30.20 30.10 28.10 29.00 29.60 31.20Cons 8,800.00 9,600.00 8,600.00 7,800.00 6,800.00 6,300.00 5,500.00ConsTxRate 17.70 18.00 17.80 17.90 16.40 17.70 16.20MIGR. COST 29,135,460 20,739,899 24,220,325 20,935,622 19,707,643 21,936,232 15,257,776Average: 21,704,708.58  

2003 - 2009

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

CALCULUS:

New Directions in WelfareParis, 6-8 July 2011

FRAMEWORK, Hypothesis:

H1: Romania & EU15 asymmetric federation2 periods: education – production (live, work, tax)

taxes: Rom.: gw τ τ τ w τ τ

H2: a part of the internationally applicable education in Romania is also applicable in EU15

where = the ratio of internationally applicable in Romania which can also be applied in EU15= internationally applicable education (in Romania or EU15)

EU15

Rom

i

i

hh γ

γih

1 γ

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION:

COST Romania & EU15

New Directions in WelfareParis, 6-8 July 2011

H3: there is a productivity differential between Romania and EU15 which would provide an incentive for romanian citizens to migrate

the productivity differential:

where: ZRom = productivity in Romania ZEU15 = productivity in EU15

IF <1, there exist the premises for the migration incentive from Romania în EU15

Calculated, = 0.29

EU15

Rom

ZZ χ

employed) capitaper (GDP Employment

GDP Ζ

χ

χ

continued, FRAMEWORK, Hypothesis:

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

New Directions in WelfareParis, 6-8 July 2011

H4: romanian citizens with EU15 applicable education have a multiplicative random individual-specific ability, connected to productivity, greater than the productivity differential

where: = the ratio of internationally applicable in Romania which can also be applied in the EU15( = 1, the particular case considered)

= the multiplicative random individual-specific ability, connected to productivity component

= 0.29

χ ) ε 1 ( γ

γε 1

γ

0.5 ; 0.5- ε χ

continued, FRAMEWORK, Hypothesis:

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

0.29 ε)(1 1.5 ; 0.5 ) ε 1 (γ γ

New Directions in WelfareParis, 6-8 July 2011

TOTAL 7 Yrs.: 152,000,000 €

Educ.: 19.15%

Labor: 45.75% Cons.: 35.10%

RESULTS:

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

New Directions in WelfareParis, 6-8 July 2011

: …+ EU15 emigrants, total ( 7Yrs., EuroStat&RNIS) ≈ 40,500

TOTAL 7 Yrs: 152,000,000 €

Anuario Estadistico de Extranjeria ( in 2001): 13,603 persons, Romanian immigrants in Spain

Annual cost average: 22,000,000 €PPS

Annual emigrants in EU15 average: 5,800 persons

Annual Average cost per emigrant: 3,800 €PPS/emigrant

OECD (2010) estimation for the total Romanian immigration: 2.5 – 2.7 million

SYN THESIS:

RESULTS:

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

New Directions in WelfareParis, 6-8 July 2011

LIMITS: VA lost (productivity differential of the emigrants) not consideredonly 1 year of emigrant’s education was computed, at present average value

results according to OECD estimates: 2.7 mil.pers. x 3,800 €PPS/pers =

10,260,000,000 €PPS

EXTRAPOLATION:

RELEVANŢĂ:

15% from medium and long-term external Romanian debt in 2010

4.5% from Romanian 2010’ GDP

1 Year’s Education Budget (in Romania, 4% of the GDP)

Brain Drain /

Brain Gain

gτwτ

la destinaţie …cetăţenie…

New Directions in WelfareParis, 6-8 July 2011

Sustainability in the State Social Security System

(SSSSS) focus: România, public pension “fund”

MIGRATION: COST

Romania & EU15

Thank You

New Directions in WelfareParis, 6-8 July 2011