www.bakbasel.com

Dr. Tina Haisch, Economist, BAK Basel Economics

GA 2008Assembly of European Regions (AER)

Open Space – International Speaker‘s CornerNov 13th 2008, Tampere

Migration: Building regional advantage

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Who is BAK?

Why is it important to talk about migration?

Business climate vs. People‘s climate

Concept

Migration and economic development

Research questions

Method

Econometric analysis

Conclusions

Content

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BAK Basel Economics: Independent economic research

Swiss economic research & consultancy institute

Staff: 35 (thereof 19 economists)

Economic data, analysis and consultancy for countries, regions and

industries

Benchmarking, forecasts, research projects (e.g. statistical/econometric

analyses, SWOT analyses, elaboration and evaluation of regional visions

and strategies)

Analytical work based on BAK’s vast performance (Gross value added at current,

constant prices as well as industry specific purchasing power parities, employment, hours worked, output per

man hour,labour cost and unit labour cost (30 variables)) and location factor database (Indicators for regulation, taxation, innovation capacity, accessibility etc.)

www.bakbasel.com

Regions - Not Only CountriesBusiness Sectors – Not Only Macro Level

Time series for800 regions in24 countries

NUTS1 to NUTS3

45 industry sectors (NACE). In selected industries more details (Life Sciences, Finance, Technology, Tourism)

CountriesRegions

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Migration: Building regional advantage

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In recent years the effects of migration, expressed through research questions like

do people follow jobs (does employment drive population changes) or

do jobs follow people (does population drive employment changes)

on regional economic development have gained considerable interest among researchers, politicians and economic actors.

-> empirical results (nature of causality) differ a lot across space and time

-> a meta analysis conducted by Hoogstra et. al in 2005 compared the results of 37 studies from 1987 to 2003. They found empirical evidence for the

hypothesis „jobs follow people“

-> Furthermore they found out that the chosen regions/countries and time periods have major influence on the results

Building regional advantage

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Building regional advantage: Business Climate vs. People Climate

Business climate:Economic performance, the development of Clusters and Regional Innovation Systems are based on the creation of localisation economies as well as on other factors (company taxation, regulation etc.)

People’s climate:Focusing on quality of life, taxation, diversity, creativity and tolerance emphasizing urbanisation economies. Such an environment attracts talents which in turn attract and generate innovative, knowledge-based economic activity

Silicon Valley, CA, USA

Cologne city beach, Germany

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Quality of Life

Concept: Explaining employment and economic performance

Migration Governance

Innovation

Regulation

Accessibility

Taxation

Economic performance of regions

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Interaction between migration and economic growth

Migration

• Students• Alumnis• etc.

• Refugees• Asylum seekers• etc.

• Migrant labour• Expatriates• etc.

Political attractiveness Economic attractivenessOther attractiveness

Attractiveness of regions and countries

• Stability• Institutions (laws, immigration policy etc.)

• Accessibility• Quality of life• etc.

• Performance• Employment• Taxation

• GDP• Employment (jobs)

Attractiveness of regions and countries

• Taxation• Regulation

• Productivity• Job vacancy

• Quality of life• Innovation resources • etc.

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1. Is economic performance the driver of migration

or is migration the driver of economic performance?

2. Do people follow jobs or do jobs follow people?

Questions to be answered with regard to regional advantage

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sample for empirical analysis:

40 metropolitan regions in Europe and the US

26 years (1980 – 2006)

methods employed:

- Simple correlations

- Correlations (with time leads and lags) to show the time structure

- Granger (1969) causalities for testing the significance of correlation

Simultaneous testing for the equations:

(1) yt = a0 +a1yt–1 + … +alyt–l + b1xt–1 + … + blxt–l +et

(2) xt = a0 +a1xt–1 + … +alxt–l + b1yt–1 + … + blyt-l +ut

F-test with null hypothesis b1 = b2 = … = bl = 0

assumptions:

natural population changes are similar across the investigated metropolitan regions

therefore migration can be estimated by population changes

Method

Source: BAK Basel Economics

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Relation of economic performance and people

Oresund

Boston

Los Angeles

San Diego

San Francisco

Glasgow

Edinburgh

London

Birmingham

Liverpool

Manchester

GöteborgStockholmHelsinki

Genf

Lissabon

WienStavanger

Oslo

Amsterdam

Luxemburg

Neapel

Rom

Milano

Dublin

MarseilleParis

Lyon

Nancy

Madrid

Barcelona

Athen

Köln

FrankfurtBerlin

München

Stuttgart Arhus

Antw erpen

Brüssel

r = 0.4

-1%

0%

1%

1%

2%

2%

-1% 0% 1% 2% 3% 4% 5%

real GDP growth 2001-2006

po

pu

lati

on

gro

wth

20

01

-20

06

Source: BAK Basel Economics

www.bakbasel.com

Relation of jobs and people

Oresund

Boston

Los Angeles

San Diego

San Francisco

Glasgow

Edinburgh

London

Birmingham

Liverpool

Manchester Göteborg

Stockholm

Helsinki

Genf

Lissabon

Wien

Stavanger

Oslo

Amsterdam

Luxemburg

Neapel

Rom

Milano

Dublin

Marseille

Paris

Lyon

Nancy

Madrid

Barcelona

Athen

KölnFrankfurt

Berlin

München

Stuttgart

Arhus

Antw erpen

Brüssel

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

-0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

employment growth 2001-2006

po

pu

lati

on

gro

wth

200

1-20

06

r = 0.52

Source: BAK Basel Economics

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Economic performance and employment (jobs)

Correlation (employment growth (t+i); GDP growth (t))

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

maximum

95%-percentile

median

5%-percentil

minimum

Economic performance today affects employment growth todayEconomic performance affects employment growth one year later

Source: BAK Basel Economics

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Economic performance and migration

Correlation (GDP growth (t+i) ; population growth (t))

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

Maximum

95%-Per centi l

Medi an

5%-Per centi l

Mi nimum

Migration today results from economic growth in the last 4 years.

Source: BAK Basel Economics

www.bakbasel.com

Correlation (employment growth (t+i) ; population growth (t))

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

Maximum

95%-Percentil

Median

5%-Percentil

Minimum

Employment and migration

Migration today results from job growth in the last 4 years (people follow jobs).

Source: BAK Basel Economics

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Until now it seems that…

– GDP growth today leads to job growth one year later

– GDP growth today leads to migration (population growth) up to 4 years later

– employment growth today leads to migration (population growth) up to 4 years later

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..and after testing for significance (Granger causality):

1. Is economic performance the driver of migration or is migration the driver of economic performance?

-> Economic performance is the driver of migration!

2. Do people follow jobs or do jobs follow people?

-> In the short run: people follow jobs-> but in the long run jobs also follow people

Log (population) causes Log (GDP) Log (GDP) causes Log (population)Lags Lags

alpha 1 2 3 4 5 6 7 8 alpha 1 2 3 4 5 6 7 85% 5 11 12 6 6 5 3 3 5% 26 16 12 10 9 7 6 3

Log (population) causes Log (employment) Log (employment) causes Log (population)Lags berücksichtigte Lags

alpha 1 2 3 4 5 6 7 8 alpha 1 2 3 4 5 6 7 85% 8 15 11 9 10 10 7 3 5% 21 7 8 10 7 6 5 2

Source: BAK Basel Economics

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Conclusions: Lessons learned from the data

Employment Growth

Population Growth = Migration

Economic Growtheffects with a time lag of ~ 1 year

effect with a time lag of ~ 4 years

Employment Growth

effects with a time lag of ~ 2 - 6 years

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Conclusions: Lessons learned from the data

► Migration is an important factor for economic success and for

regional advantage!

► Economic growth is the catalyst for job growth and migration

► But: Causality is directed forwards and backwards!

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What should regional actors take into account?

► Therefore: The construction of both, business climate and people’s climate

are very important for the economic success of a functional region!

► Most regional actors focus mainly on attracting companies and

improvement of business conditions -> business climate

► But: For sustainable long-term regional growth, people‘s climate is as

important!