Towards a European migration policy

The stagnating West European population combined with the prosperous economic development of the European Community (EC) generate strong economic incentives for immigration. The drastic political changes in Eastern Europe have caused additional migration pressures. There are a variety of problems with the economic and political integration of migrants, however. The paper argues that immigration can compensate for demographic losses due to the decline and ageing of the European labor force. Economic theory further predicts welfare gains from free factor movements, which should be reaped as long as social costs and adjustment costs are not prohibitive. An active European migration policy is recommended to achieve this aim.This article is a completely revised version of CEPR Discussion Paper No. 641, presented by the second author at the CEPR Workshop The economies of migration on 23 November 1991 in London, UK, and at a hearing of the European Parliament on 25 May 1992 in Bruxelles, Belgium.