Competitiveness of Germany and the Labour Market: A Migration Perspective

Abstract

The current paper contributes to the existing literature on migration by explaining the emigration pattern from Denmark, Finland and Sweden to Germany. We have tried to discover the reason why people migrate from high-income European Union (EU) member states to Germany, which for a long time has hosted the highest number of migrants when compared to other EU member states. We have employed gravity models using fixed effects and ordinary least squares estimation for 1998 – 2019. Our results have indicated that Germany, compared to other EU member states, is more competitive in terms of its labour market efficiency. Germany is an attractive destination for migrants from Denmark, Finland and Sweden in terms of its employment rate, wages and effective government support of its labour force programmes. The current research provides insights into enhancing German competitiveness in terms of labour market factors, which is important for both the migrant and native populations. The results show that if wisely managed, the labour market attracts the labour force, which can address critical social issues Europe is currently facing. In particular, competition issues for high-skilled workers, an aging population, and a low birth rate. The study indicates that the long-term attractiveness of Germany for migrants is based on the efficient participation of the government in labour management-related decisions.