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European Economics Letters Volume 4 Number 1 (2015) pages 30-36
Contents lists available at www.eelet.org.uk/ShowPage.aspx?ID=7
European Economics Letters
Semi Annual Online Journal
ISSN 2323-5233, ISSN-L 2323-5233
Journal homepage: www.eelet.org.uk
The EU Blue Card scheme: A polarization vector
Hélène Syed Zwick a and S. Ali Shah Syed
b*
a
Laboratory EQUIPPE, University of Lille1, France
American University in Cairo, Egypt
‫ ٭‬Corresponding information; Email: [email protected]
b
ARTICLE INFO
Article history:
Received 22 Mar 2015
Accepted 25 Apr 2015
Available online June 2015
JEL classification:
J61
J62
J68
J69
J115
Keywords:
Blue Card
migration policy
European Union
highly qualified migrants
ABSTRACT
This study employs a three countries sequential model, to shows that the EU Blue Card is a
potential vector of polarization of highly qualified migrants within the EU. We identify two
major issues: conflict between the EU Blue Card scheme and national mobility schemes of
Member States. We observe that smaller Member States do not find the EU Blue Card
scheme useful. For big countries, the scheme provides platform to attract qualified foreigners.
This paper suggests pathway at the time when the European Commission has prioritized
revision of the EU Blue Card Scheme in its agenda.
© 2013 EELET.ORG.UK Copyright All rights reserved.
1. Introduction
To remain in the international competition for talent, the European Union (EU) launched, in 2012, after five years of
negotiations, the EU Blue Card; a European scheme dedicated to attract highly qualified workers from third countries by setting
the conditions for entry and residence. Such an approach at the EU level is unique and is mainly driven by four factors: First,
because the European political mandate since 2004 allows for such initiatives in the area of migration. Second, because the
Member States (MS) face common challenges of competitiveness in the areas where local population tends to decrease due to age
factor among others, and where labor markets are struggling to recruit and renew skills (Cedefop, 2012; Dumont 2014). Third, as
the majority of MS had already launched their own national schemes for highly qualified migrants1, however, some of them –
especially small countries whose national language is not widely spoken outside their borders – showed need for such an
initiative at European level to grant them more visibility. Fourth, because highly-qualified immigration is the migration category
for which European citizens are less concerned in terms of economic, social and/or fiscal impacts (Cerna, 2010; Guild, 2007;
Luedtke, 2009;).
In 2012, the EU Blue Card was implemented in 24 MS2 but scientific research on this initiative already started in 2006 when
negotiations commenced. We identify two main periods: the first period regroups policy papers which try to describe and to have
a first critical view of the EU Blue Card (Boswell and Geddes, 2011; Cerna, 2010; Collett, 2008; Guild, 2007; Gumus, 2010).
The second period is recent and corresponds to proposals to a renewed EU Blue Card mainly in political science (Cerna, 2013;
1
Fifteen MS have national policies in place for attracting qualified migrants: Austria, Belgium, Czech Republic, Estonia, Finland, France, Germany, Greece, Italy,
Lithuania, Luxembourg, Netherlands, Slovakia, Spain and Sweden.
2
Three countries have exercised their opt-out: the United Kingdom, Ireland and Denmark. Croatia joined the EU in 2013 and has started the implementation process.
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European Economics Letters Volume 4 Number 1 (2015) pages 30-36
Eisele, 2013). Finally, there is a consensus that the EU Blue Card needs to be remodeled otherwise it will remain an advertising
tool (Cerna, 2013). This paper provides the required pathway to the new European Commission 2014-2019 to investigate the
review of the EU Blue Card scheme3. We theoretically examine the potential Blue Card scheme impact on the repartition of
highly-qualified workers within the EU, among MS and we define the principles on which to remodel the scheme.
Our findings highlight a high risk of polarization of the highly qualified migrants in some MS, the biggest ones of the EU and
marginalization of small countries through two main limitations that the EU Blue Card has: the competition between national and
European schemes for highly qualified immigrants and too higher costs of intra-European mobility which cannot instigate the
highly-qualified immigrants towards small countries, where the language is less exportable outside their own borders. This incites
migration to big MS where the cumulated human capital is not as specific as in small countries. We rely on theoretical rather than
an empirical assessment because of the lack of data4.
The rest of this paper has three sections. In section 1, we describe the two shortcomings of the EU Blue Card Scheme linked to a
lack of European dimension which can lead to its inefficiency. In section 2, we present a simple theoretical model with three
countries to show the risk of polarization in big countries and that of marginalization of small ones. Section 3, concludes.
2. Why and where the European dimension is hidden?
The EU Blue Card is the result of a hard compromise between MS. Despite the existence of common challenges, as evoked in
introduction, MS also have different situations on the labor market, immigration flows, labor shortages, political structures (Salt
& Almeida, 2006). The extent and the level of qualification needs for foreign skills differ between MS. Therefore, preferences for
the immigration of highly qualified workers vary from one MS to another (Cerna, 2010). Finally, if the approach to the creation
of the EU Blue Card is European, the principles of the scheme seem unfortunately not. Two failures are evident: the lack of
immediate intra-European mobility rights and the competition (overlap) between national schemes and the European scheme.
2.1 The lack of immediate intra-European mobility rights or the utopia of a European labor market:
Originally, the future scheme for highly qualified third country migrants was intended to limit the segmentation of the European
labor market, source of a lack of attractiveness of the EU, by ensuring the mobility of its holders in the European area5. The
segmentation of the European labor market reflects the fact that some workers could not work in the area that would be most
suitable for them and for the society in terms of utility. The third-country nationals have to face 28 labor markets in the EU with
their own national rules. Initially, the proposed Blue Card was intended to "promote efficient allocation and redeployment of
highly qualified third country nationals in the EU labor market" (European Commission, 2007).
However, the current EU Blue Card does not allow third country nationals for immediate mobility in different European national
markets. Indeed, each MS has the right to decide the number of EU Blue Cards it wants to deliver each year; the scheme doesn't
establish a right of admission. The EU Blue Card entitles its holder "after 18 months of legal residence in a MS" to go "under
certain conditions" in another MS "for the purposes of highly qualified employment" (European Commission, 2009). For Von
Weizsäcker (2006), the fact that intra-European mobility is not immediate undoubtedly limits the usefulness of the EU Blue Card
since the labor market of circulation is much smaller than expected. As the author explains, it's almost less difficult to apply for a
new EU Blue Card in case of desire for mobility within Europe than to obtain the permission by the second MS to transfer the EU
Blue Card obtained in the first MS. This lack of the immediate mobility on European national labor markets penalizes the interest
of the EU Blue Card. Mechtenberg and Strausz (2009) theoretically demonstrate a close interdependence between highly
qualified migration and intra-EU mobility.
Nevertheless, MS and the EU claim that the EU Blue Card scheme offers more intra-European mobility facilities than other
national systems for highly qualified migrants: in fact, after five years of residence on the territory of the EU under the EU Blue
Card during which the last two years must be spent in the country where the application has been made, the holder can obtain the
status of long-term resident. However the system still remains relatively rigid and the right to immediate intra-European mobility
is conferred only through the status of long-term resident.
2.2 The competition between national and European schemes: where is the level playing field?
In October 2007, some MS expressed their reluctance to the idea of a European initiative for highly qualified migrants and
announced that their own national schemes will remain the priority (especially for Germany, Slovakia and Austria). Today, three
countries have exercised their opt-out: the United Kingdom, Ireland and Denmark, mainly because they already have a structured
national system and a relatively open labor market than other MS.
In the first draft of the EU Blue Card a proposal for the abandonment of national systems was evoked through a process of
harmonization of the different national schemes. This proposal was in line with the European Commission objective to create a
level playing field. However, the MS did not opt for it. Instead of this, the EU initiative is added to the national schemes. Wihtol
de Wenden (2010) speaks of superposition of several normative reference spaces and partially integrated into the EU, which tend
to create a “Europe à la carte”. The superposition of these levels of legislation raises the question: will small countries which
have problem of visibility to attract highly qualified immigrants be satisfied with this situation?
3
JC. Junker (2014), Mission Letter, to Commissioner for Migration and Home Affairs. European Commission, September 2014.
First data are only available for 2013; which nevertheless confirm concentration of EU Blue Cards issuance in Germany being more than 90% of the total EU Blue
Cards granted (European Commission, 2014).
4
5
Franco Frattini, European Commissioner for Justice and
Home Affairs in 2007 explained it very well.
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European Economics Letters Volume 4 Number 1 (2015) pages 30-36
3. A sequential model of migration with three countries
Using a simple sequential model of migration with three countries, we discuss the efficiency of the EU Blue Card, as measured
by the aspect of a better distribution of the highly qualified immigrants within the EU, between MS. We use the notation of
Chiquiar and Hanson (2005).
3.1 Situation without EU Blue Card:
Let us consider three regions 0, 1 and 2. The wage function
in the region k (k= 0, 1, 2) is denoted:
, of an individual
+ . +
(1)
, =
The wage is the sum of the base wage , of the multiplication of the amount of each unit of schooling valuable in the region
denoted (return to schooling) with the level of schooling and a perturbation which is normally distributed, with a mean
equal to 0 and a variance equal to . The models of selection usually include this type of perturbation to represent unobservable
characteristics of an individual such as his motivation or his native skills. We assume that the correlation coefficient is
denoted between perturbations and with = 0, 1, 2, = 0, 1, 2and ≠ . When
is positive, unobservable characteristics
of an individual are granted in the same direction in the two regions and .
The wages variation between individuals in a region is linked to the variation of level of schooling. Besides, the variation of the
mean of wages of individuals between regions is linked to differences between regions in mean levels of schooling or in return
to schooling .
Region 1 is characterized by a wage function different from regions 0 and 2 when the individual studied abroad due to a lack of
skills recognition and portability:
+ .
, ∗ +
(2)
, =
Contrary to the wages functions of regions 0 and 2, there is a rupture in the wage function in region 1 when the level of schooling
of the individual is higher than a level of schooling denoted ∗. When
< ∗ , the wage function is identical to the wage
function of regions 0 and 2. When ≥ ∗ , the wage is constant, sticky due to ceiling and doesn't depend on the level of
schooling of the individual anymore. This rupture characterizes a problem of skills recognition and portability in this region 1.
We assume that the regions are different by their level of economic development. Region 0 is the less developed, region 2 is the
most developed and region 1 has an intermediate development. With this assumption, we have the following inequality: ! <
< .We assume that the complementarity effect dominates the rarity effect when the level of development of a region is low.
The less a region is developed, scarce is the number of highly qualified workers. The most important returns to schooling are
(rarity effect) but the less highly qualified individuals have externalities linked to rare public goods (complementarity effect). So
the return to schooling of the less developed region is lower than the return of schooling of the region 1, which is lower than the
return to schooling of the region 2.
We also assume that the individual is rational: he notes and compares the economic conditions of each potential region of
destination and chooses the region which maximizes its potential future expected gains. The propensity to migrate denoted " for
an individual who lives in the origin region i to the destination region j ( = 0, 1, 2) is given:
%
" =
(3)
, −
, −$
%
Where $ corresponds to the monetary transaction costs linked to migration. In time equivalent terms, these migration costs can
be given by:
& =&
=
*
'()
+(
(4)
These costs include transportation costs, installation costs and management costs of the migration process. We assume that these
costs are decreasing with level of schooling (Chiswick, 1999; Cuecuecha, 2005; Chiquiar & Hanson, 2005).
We assume that the individual wants to maximize his gains. He will decide to stay in his home region when gains are higher
than gains that he may acquire in his migrating region , net of costs of migration. Specifically, the individual is encouraged to
migrate when " > 0and to stay in his home region when " < 0.This propensity to migrate " in the form following
decomposed by region of destination:
%
" =
≅
, − ln
, +$
, −
, − & (5)
5 78 %
We have: ln0& 1 = 2() − 3
& = 4 6() ) , with 3 > 0.
We are interested in immigration conditions in region 1. Suppose that the individual has an interest originating from 0 to migrate
(the probability he chooses region 1 is the form of either :
90
!
:"! > 01 = 9;
−
+
.
,
∗
−
+ 4 56<= 78=% − 4 56<> 78>% > 0?(6)
Below two situations are observed as in Figure 1: (i) the random terms are perfectly correlated so are not sources of difference
between the regions, to the extent that unobservable skills are perfectly transferable or (ii) there are no random terms. The upper
figure represents the bargaining of an individual from region 0: the level of schooling for which he is encouraged to migrate to
region 1 is bounded between and. The bottom graph shows the same for an individual arbitration from the country 2. Again the
level of education for which
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European Economics Letters Volume 4 Number 1 (2015) pages 30-36
Figure 1: Immigration conditions to region 1 without EU Blue Card
From region 0:
From region 2:
he is encouraged to immigrate to the country is bounded between @! and A! . There is no incentive to immigrate to the country
for an individual from the country 2. Higher the level of education of the individual is high, regardless of country of origin, the
likelihood to migrate to country 1 is low.
3.2 Situation with the EU Blue Card Scheme in period 1:
We assume the introduction of a scheme for highly qualified migrant (EU Blue Card Scheme) in region 1. All individuals are not
eligible for this scheme. An individual can become an EU Blue Card holder if his level of schooling is higher or equal to a level
fixed by the legislator and denoted @′ . This regional scheme partially changes the wage function of region 1 and is given now by:
, < @′ C
(7)
+
, ≥ @′
′
When < @ , the individual is not eligible for Blue Card, and bargaining conditions remain the same than in the initial situation.
When ≥ @′ , the individual is eligible for Blue Card, and faces a new wage function growing with the level of schooling.
Specifically, the EU Blue Card recovers, through the revelation of the level of schooling of its holders, compensation increasing
with the level of schooling. In addition, the EU Blue Card reduces migration costs for individuals whose level of schooling is
higher than @′ thanks to the introduction of3 D' :
ln
=B
+
,
∗
EF
& = 4 56(> 78> % , with 3 D' > 3 > 0
Migration conditions remain the same for regions 0 and 2.
Figure 2 resumes the impact of the EU Blue Card introduction on the bargaining of an individual coming from region 0. With the
EU Blue Card, we see a broadening the basis of qualifications for the region 1 to the right. Region 2 continues to attract highly
qualified migrants but no less than without the EU Blue Card. Besides, for some individuals with a level of schooling higher or
equal to D' and migrating to region 1 even without the EU Blue Card, thanks to the scheme, have a better recognition of their
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European Economics Letters Volume 4 Number 1 (2015) pages 30-36
skills and obtain a wage higher than the wage obtained in region 1 without the EU Blue Card. For individuals with a level of
schooling lower than D' , bargaining conditions still remain the same and they are more instigated to migrate to region 1 than to
region 2.
Figure 2: Migration conditions to region 1 with the EU Blue Card
From region 0:
From region 2:
When national schemes for highly qualified migrants are added to the European level, we can easily understand that the gain of
the number of migrants due to the EU Blue Card Scheme is reduced. The MS become more rivals and the migrants have to
choose between a higher numbers of schemes. This rivalry within the EU is not balanced: the next point shows that the lack of
intra-EU mobility rights for EU Blue Card holders gives a significant advantage to the big countries.
3.3. Situation with the EU Blue Card in period 2:
We consider now region 1 as a region with two countries: the first one denotedG is a big country where the language is
exportable to abroad; the second one denoted is a small country where the language is less spoken to abroad. We suppose that the
function of net gains is the same for the two countries.
We introduce a second period to our model and focus our attention on an individual who is EU Blue Card holder in the period 1.
In order to show the polarization risk, we assume that he migrated to the small country in region 1 in period 1. In period 2, his EU
Blue Card expires. He has three alternatives: (i) does not to renew the card and return to his country of origin; (ii) does not renew
the card and migrates to the region 2; or (iii) renews the card to migrate to the bigger countries in the region 1.
The functions of net gains associated with each alternative for the period 2 are:
EF
, − 4 56>(< 78( % + H
, − 4 56>= 78= % + H
, − 4 56(> 78> % + H
WithH a variable representing preferences of the individual. We consider that H = 0, H < 0 andH
34
I
< H J . The individual will
European Economics Letters Volume 4 Number 1 (2015) pages 30-36
always prefer his origin country to other world countries and within region 1, he prefers the big country because of the portability
of linguistic skills in case of emigration than if he lived in the small country. Even if an individual has already migrated in region
EF
1, the cost of a renewal of the EU Blue Card is constant, the same than the cost in period 1and denoted 4 56(> 78> % .
The individual has finally no interest to migrate in the small country in period 1 implying an important polarization risk of highly
qualified migrants whom level of schooling is situated between @′ and K′ in big countries. The only way for the small country to
attract an EU Blue Card holder is to submit a premium wage that would compensate the migration cost gap between the big
country and the small one.
4. Concluding remarks and Policy recommendations
This study describes the EU Blue Card Scheme impact within the EU. We point out the two main shortcomings of the scheme:
The parallelism between the European Scheme and national Schemes on one hand, and the lack of intra-EU mobility rights for its
holders on the other require to be addressed by the European institutions. Our main finding through a simple theoretical model
with three countries is that the EU Blue Card Scheme can lead to a dangerous polarization of the highly qualified migrants in big
MS, where national language can easily be exported. Through this demonstration, a review of the EU Blue Card is a must. We
formulate two main policy recommendations to the European Commission and other stakeholders in charge of its review.
First, the superposition of the European Scheme and national scheme concerning highly qualified migrants has to be addressed.
We suggest that MS have to choice between two options: (i) taking the opting-out and maintaining their own national scheme for
highly qualified migrants; (ii) implementing the EU Blue Card Scheme and –if necessary- removing their national scheme for
highly qualified migrants. This initiative will improve the visibility of the EU Blue Cards for highly qualified workers.
Second, we suggest that the link between immigration and intra-European mobility should be reinforced. We propose that
volunteer MS could launch an enhanced cooperation procedure, which allows them to continue to work more closely together. In
this sense, the EU Blue Card could be a European work permit, as it was proposed at the beginning of negotiations. Its holders
would therefore be able to circulate and to change their country of work almost immediately in these volunteer MS.
Acknowledgment: This paper has benefited from valuable comments of Hubert Jayet. The authors acknowledge the financial
and technical supports from Confrontations Europe, especially Philippe Herzog and Claude Fischer. The usual disclaimer applies,
and the views expressed do not represent those of Confrontations Europe nor the AUC.
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