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Labor Market Effects of Open Borders: Evidence from the Finnish Construction Sector after EU Enlargement

Author

Listed:
  • Isa Kuosmanen
  • Jaakko Meriläinen

Abstract

The eastern enlargement of the EU differentially exposed workers in different regions and occupations in Finland to a foreign workforce, in particular to posted workers. Using a triple-differences strategy and detailed individual-level administrative data, we document robust evidence that the entry of new EU countries decreased the annual earnings of vulnerable workers relative to less vulnerable workers in the construction sector. This decrease was persistent even ten years after the enlargement and economically meaningful, about 9 percent (roughly a month’s salary per year), on average. We also show a small increase in unemployment and provide evidence on different adjustment mechanisms.

Suggested Citation

  • Isa Kuosmanen & Jaakko Meriläinen, 2025. "Labor Market Effects of Open Borders: Evidence from the Finnish Construction Sector after EU Enlargement," Journal of Human Resources, University of Wisconsin Press, vol. 60(2), pages 434-468.
    • Handle: RePEc:uwp:jhriss:v:60:y:2025:i:2:p:434-468
    Note: DOI: https://doi.org/10.3368/jhr.0321-11546R2
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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