• Coordination on short-term visitors for third-countries’ citizens, i.e. the “Schen-gen visa” that lets them travel freely within the Schen“Schen-gen area (applying only once rather than for each Schengen country they want to visit).
• Coordination on border control measures vis-à-vis third countries and, when need-ed, members’ border control measures supplemented and supported by other mem-ber states (via the agency Frontex).
Critically, the Schengen Agreement also establishes information systems that facilitate police cooperation among members, especially as concerns illegal migrants.
The benefits of the Schengen Agreement are obvious to travellers in Europe – it saves time and money (by reducing information and transaction costs) for citizens and non-citizens with Schengen visas. But there are other benefits:
• Schengen has gone hand in hand with an increase of net immigration to the Schen-gen area – an increase not experienced by the countries outside the area. As Table 1 shows, non-Schengen nations have experienced a decline in immigration flows.
• Job opportunities offered by an individual country in the Schengen area are more attractive as they come with the option of freely moving across the entire area.
• Schengen has also eased the conditions for doing business in Europe; travellers from abroad perceive the Schengen area as a common market, which is much more attractive to businesses than the fragmented situation before the agreement.
Table 1. Inflows of migrants, thousands of people pre-Schengen
A dangerous campagin: Why we shouldn’t risk the Schengen Agreement
Quantifying the gains of Schengen for businesses, consumers, and tourists is difficult, if not altogether impossible. Given the high and increasing tendency of travelling all over the Schengen countries and into the area, removing Schengen is like introducing a tax on economic integration. It would also have negative consequences on the shaping of a common European identity, hence on social and political integration just at a time in which the public debt crisis and fiscal spillovers across jurisdictions require stronger cross-country policy coordination in the EU.
Does Schengen increase illegal migration?
The Schengen Agreement does not reduce incentives for the enforcement of border controls in each country. It actually encourages tight border controls vis-à-vis third countries. According to the so-called Dublin II directive, the first EU nation a refugee enters is responsible for the handling (and costs) of the asylum procedure (Hatton, 2005). This gives nations an incentive to shore up weak border protection on third-nation borders. If refugees apply for asylum in other member countries, they will be sent back to those countries where they entered the EU in the first place.
In this way, Schengen and the Dublin II directive created strong incentives for border protection. It also meant, however, that certain members were providing a public good – namely, border control – for the entire area. It is easy to identify such countries: Italy, Spain, and Malta in the south; Poland, Bulgaria, and Romania in the east.
Migration pressures are particularly strong in the south and, here, Spain and Italy are especially affected by illegal migration from sub-Saharan Africa and northern Africa. In spite of the severe recessions experienced by southern Europe, the political revolution and the subsequent economic downturn in northern Africa further increased these pressures.
The figures of illegal migrants which entered Italy and Spain via the sea look rather moderate compared to previous waves of immigrants fostered by political instability,
for example in the Balkans. In Italy they were, on average, of the order of 20,000 per year, except in 2011 when they jumped to about 50,000. Bilateral agreements with northern African countries to prevent transit migration from sub-Saharan Africa and the blood toll on the sea contributed to discourage larger flows. However, there are other channels to entry so that actual figures might be much larger, and there are no data on illegal migration across countries in the Schengen area.
Border controls are expensive and the treatment of asylum cases can be even more costly. Italy is bound to spend more than €1 billion in 2012 just for the daily allowances of asylum seekers who applied for this status in 2011. These costs are, in our view, a critical issue and the threat to the sustainability of the Schengen Agreement.
The foul play of Berlusconi
Last year, the government headed by Silvio Berlusconi made a populist move undermining the principles of the Schengen Agreement and the Dublin II directive. It provided tourist visas to refugees and encouraged them to cross the border with other countries, notably France. This clearly violates the purpose of the Dublin II directive.
Although these measures were withdrawn within a couple of days, they seriously damaged cross-country cooperation in enforcing the Schengen Agreement. Well before the Sarkozy campaign, the Danish government announced its intention to re-impose controls on its frontiers with Germany and Sweden.
It should be stressed that the problem will not be solved by re-introducing border controls. If the Schengen Agreement and the Dublin II directive are abolished, the incentives for border protection in the most affected countries are reduced since governments may hope that illegal migrants find their way to other EU countries if they are sufficiently tough with migrants. This would create unfortunate knock-on effects – a race to the bottom in humanitarian standards and high costs of border controls across Schengen countries. Moreover, border controls for third-country nationals also require
A dangerous campagin: Why we shouldn’t risk the Schengen Agreement
border controls for citizens of the Schengen countries, and this would involve high economic and social costs.
Sharing the costs of border controls?
The countries most affected by illegal migration perceive the other countries in the Schengen area as free riders in terms of border controls. As mention, their third-nation controls provide a public good for the whole area. A reform of the Schengen acquis therefore has to address this issue. The most natural way to take these concerns into account is to share at least some of the costs of border enforcement.
EU governments ought to acknowledge that cross-country spillovers of migration policies are unavoidable. The case of the French-Italian border is not the first, nor will it be the last. Here are a few precedents.
• Finland tightened up its restrictions on immigration in 2004, reacting to the more restrictive stance taken by Denmark in 2002 which was inducing many more people to go to Finland.
• Portugal adopted more restrictive provisions in 2001, just after a similarly restric-tive reform implemented by Spain in 2000.
• Ireland chose a more restrictive approach in 1999, after two reforms in the UK that had tightened up migration restrictions in 1996 and 1998.
The lesson from all of these episodes is that uncoordinated national policies cannot govern migration. They can only give rise to a race to the top in putting nominal restrictions on migration, systematically violated by illegal migrants coming in from somewhere else. A coordinated policy for legal migrants at the EU level is warranted.
In this context, it would be wise also to consider a European asylum and humanitarian policy, possibly integrated into a points-based system.
Addressing the fundamental migration problems
At present, France and most other EU member states pursue a zero immigration policy vis-à-vis the countries in the northern Africa. The consequence of these policies is that family reunification, humanitarian migration, and illegal migration become the main channels of entry. These immigrants are, on average, less educated than economic migrants and natives, do not generally achieve native language proficiency and typically have a poor performance in the labour market and education system of the host country. This in turn feeds into negative perceptions of natives as to the fiscal costs of immigration (Boeri, 2009), and makes economic and social integration more difficult especially at times of slow growth, let alone deep recessions. These problems cannot be addressed by a reform of the Schengen Agreement. They require a fundamental reform of immigration policies, restoring a key role for labour migration.
Learning from the EU eastern enlargement
Per capita incomes in most northern African countries are not much lower than those of the new EU Member States when they joined (Bruecker et al. 2009). While they stand between 25 and 35% of GDP per capita in the EU measured at purchasing power parities, the GDP of the new member states varied between 35 and 55% of those in the EU15 when they joined. Moreover, substantial parts of the youth urban labour force in north Africa are, at least on paper, relatively well educated. Thus, the experience of the eastern enlargement of the EU can be rather instructive in assessing the consequences of increased immigration from northern Africa.
From the eight new member states, which joined the EU in 2004, we have seen an annual net migration inflow of about 210,000 persons, another 200,000 moved annually from Bulgaria and Romania (Baas and Bruecker, 2012). The education levels of these young migrants are similar or higher than those of natives, and in many countries their unemployment rates are below the national average. According to our simulations, net immigration from the ten new members so far generated an increase of GDP for the
A dangerous campagin: Why we shouldn’t risk the Schengen Agreement
(enlarged) EU of the order of 0.7%, or €74 billion. This result is not negligible in times of slow growth in the entire EU area. More benefits will come as the assimilation of immigrants proceeds and they get jobs fitting their competences, rather than downgrading their skills.
Given the larger size and the slightly lower per capita income in the Mediterranean countries neighbouring the EU, the economic gains from potential migration from northern Africa are even larger. Clearly, it is much too early to consider a free movement of workers from these countries similar to the eastern enlargement of the EU. But adopting more realistic restrictions vis-à-vis northern African countries and encouraging skilled immigration from Egypt, Tunisia, and other countries in that area can reduce pressures for illegal migration and create substantial economic gains in both the receiving and sending regions.
References
Baas, T., Bruecker, H. (2012), The macroeconomic impact of migration diversion:
Evidence from Germany and the UK, Structural Change and Economic Dynamics (forthcoming),
Boeri, T. (2009), “Immigration to the Land of Redistribution”, Economica 77(308).
651-687.
Bruecker, H. et al. (2009), Labour mobility within the EU in the context of enlargement and the functioning of the transitional arrangements, European Integration Consortium.
Hatton, T. (2005) European Asylum Policy, National Institute Economic Review 194 (1), 106-119.
EC (2009). “Official Journal of the European Communities - The Schengen Acquis”, 2009.
About the authors
Tito Boeri is Professor of Economics at Bocconi University, Milan and acts as Scientific Director of the Fondazione Rodolfo Debenedetti. He is research fellow at CEPR, IZA and Igier-Bocconi. His field of research is labour economics, redistributive policies and political economics. His papers have been published in the American Economic Review, Journal of Economic Perspectives, Economic Journal, Economic Policy, European Economic Review, Journal of Labour Economics, and the NBER Macroeconomics Annual. He published 7 books with Oxford University Press and MIT Press. After obtaining his Ph.D. in economics from New York University, he was senior economist at the Organisation for Economic Co-operation and Development from 1987 to 1996. He was also consultant to the European Commission, IMF, the ILO, the World Bank and the Italian Government. He is the founder of the economic policy watchdog website www.lavoce.info and he is scientific director of the Festival of Economics, taking place every year in Trento.
Herbert Brücker is Head of the Department for International Comparisons and European Integration at the IAB since 2005 and Professor of economics at the University of Bamberg since 2008. He completed a degree in sociology at the University of Frankfurt in 1986 and attained subsequently his doctorate from the University of Frankfurt in 1994. In 2005 Herbert Brücker received his habilitation in economics from the University of Technology in Berlin. From 1988 to 2005 he held research positions at the University of Frankfurt, the German Development Institute (GDI) and the German Institute for Economic Research (DIW) in Berlin. Herbert Brücker was Visiting Professor at the Aarhus School of Business from 2004 to 2005.