Effects of the Full Opening of the Austrian Labor Market to EU-8 Citizens

Within the next few years, Austria will lift its temporary restrictions on the free movement of workers from the EU-8 countries. Estimates of the resulting inflow of foreign labor to Austria are surrounded by a high level of uncertainty and vary widely. A review of the literature and the results of empirical estimations presented in this paper – indicating an expected inflow of some 200,000 immigrant employees within ten years – suggest the following: Immigration will have a small impact on the Austrian labor market at the aggregate level, but may reduce the employability of low-skilled, low-income workers. As regards the impact on inflation, it can be assumed that price pressures will decline.