Post-war International Labour Mobility: The Netherlands
Joop Hartog, University of Amsterdam
Nick Vriend, European University Institute, Florence
in: I. Gordon & A.P. Thirlwall (Eds.), European Factor Mobility. Trends and Consequences, MacMillan, London, 1989, p. 74-94

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Introduction. The standard neo-classical view on labour mobility is fairly straightforward. Labour will move from relatively depressed sectors and regions to sectors and regions that fare relatively well. At the level of individual labour supply, recognition of the separation in time of the cost of moving and the benefits leads to an investment framework (see e.g. Fields,1979). Individuals move if they expect a positive return on their investment. They will forgo expected future opportunities in their present situation, expend time and money in the move itself and hope to recover these cost from an improved position in the destination of their choice. The standard neo-classical theory predicts mobility if expected discounted benefits are positive. Usually, all kinds of frictions, such as informational, psychological and sociological barriers are incorporated in the analysis in terms of the exogenously given distance between origin and potential destination. If expectations are geared to the observations of current conditions, the theory predicts movement from areas with low wages and high unemployment to areas with relatively high wages and low unemployment. In this view labour mobility is a supply side phenomenon: it is the worker who takes the initiative.
This paper, while remaining within the neo-classical tradition, extends this basic model somewhat, particularly in taking account of employer behaviour, in an attempt to account for the main features emerging from a description of post-war developments in migration to and from the Netherlands. These are shown in summary form in Figure 6.1 which highlights Holland's transition, around 1961, from being a country of net emigration to one of net immigration. At an impressionistic level we may note that this coincides with the start of a period of very tight labour market conditions, with an unemployment rate in the Netherlands of 0.8 per cent. Much of the data which we might wish to use for more formal quantitative explanations of this shift, and the fluctuating levels of migration, is, however, not readily available in the Netherlands. Thus, in what Samuelson (1947) sees as a typical situation for the economist, 'in the absence of precise quantitative data (we) must infer analytically the qualitative direction of movement of a complex system' (p. 258). To this end, after trying some simple models of overall flows (in section 2), attention is concentrated on identifying specific influences on some of the main component elements (in section 3) and examining the role of immigrants in the unskilled labour market (in section 4), before considering possible policy options (in section 5).

Nick Vriend,
Last modified 2012-12-07