09 May New TEMPER Working Paper «What attracts highly skilled migration to Europe?»

This paper analyzes the potential of a number of pull factors (unrelated to immigration policies) in attracting highly skilled migrants in 18 European countries. To do so we built a unique dataset combining information on the flows by level of skills from the European Labor Force Survey (Eurostat) with a large list of proxies of pull factors obtained from different OECD databases. Specifically, using country fixed effects we predict the absolute number of migrants with tertiary education credentials arriving over time (between 1999 and 2013). The list of pull factors whose effects we study covers different dimensions of returns to education and the welfare configurations of the selected countries. Our analysis reveals that wages are, by and large, the most important factor attracting skilled migration flows. Other indicators of factors such as the rate of unemployment or the degree to which the economy is innovative are much less relevant. The welfare magnet hypothesis is also confirmed. Social expenditure attracts more skilled migrants There are also bases to argue that fiscal pressure shrinks the flow of the most wanted migrants, particularly when they do not necessarily have the intention of staying in the long term.