Self-employment effects of restrictive immigration policies: the case of transitional arrangements in the EU
Published: November 2017
Keywords: transitional arrangements, immigration policy, immigrant self-employment, EU enlargement, EU mobility
JEL classification: J15, J18, J61, J68
The paper contributes to existing debates concerning the effectiveness of immigration policies, by investigating the particular case of transitional arrangements implemented during the European Union enlargement rounds of 2004 and 2007. A number of authors have argued that instead of deterring immigration, the arrangements have changed the channels EU8 and EU2 migrants have chosen to enter the country of destination, by becoming self-employed. Self- employed individuals were not subjected to restrictions. Our results suggest that EU2 migrants have indeed turned to self-employment as a way to circumvent the restrictions, and point to a substitution effect in the case of EU8 migrants. The results have broader research and policy implications, revealing the importance of considering the effect immigration policies have in shaping the volume and skill composition of migrants, as well as their labour market trajectories and subsequent economic activities.