Who's Leaving Italy?

In recent decades, strong emphasis has been put on internal migrations within the advanced world. Since workers tend to move to where productivity is higher, an increase in international mobility could facilitate the meeting of labor supply and demand, and, from a macroeconomic standpoint, reduce regional disparities and increase aggregate efficiency. In fact, the geographic mobility of labor is one of the necessary conditions behind the constitution of a single currency area. Also, circulation of the labor force facilitates the exchange of knowledge between countries and increases individual human capital (e.g. language skills). These considerations have been enshrined in Europe's institutional architecture since its inception, knowing that intra-EU migration flows were relatively modest at the time. In this perspective, the acceleration of internal mobility in the wake of the Great Recession is to be welcomed.

However, a balanced judgment must also acknowledge there are limits in the market adjustment mechanisms that exclusively rely on labor mobility. An initial observation concerns regional imbalances. Migration flows could put countries of origin in dire economic straits by undermining whole industries. Plus, these negative effects might be heightened by the fact that it's the younger, more educated, and more motivated work force that leaves. This means a progressive depleting of the best component of the labor force, with possible long-term effects on the economy. In the short term, emigration countries are spending money in educating a work force whose labor ends up benefiting other countries. To give substance to this concern, one could note that the percentage of Europe's internal migrants with college education has gone from 27% in 2004-2008 to 41% in 2009-2013.

The data highlight the geographic mismatch between the demand and supply of skills, which has been partly bridged by an increase in internal labor mobility for highly skilled and/or educated workers. Economists have argued almost unanimously that this reduces the pool of overqualified labor. Consistent with this, the reduction of barriers to skilled workers' mobility is part of the Europe 2020 strategy to combat overqualification. However a 2013 study points that the lesser presence of overqualified workers among internal migrants is a problem of missing variables, and goes on to argue that young graduates abandon their countries to be employed in low-skill jobs.

The time has come to strike the right compromise between the unconditional praise of internal mobility and the increased hostility vis-à-vis international migration flows.