February 2023

IZA DP No. 15930: Crossing Borders: Labor Market Effects of European Integration

This is an updated version of IZA DP 15930, first published in February 2023. The new version includes an update of the matching algorithm and additional robustness checks.

This paper investigates an EU policy reform that granted Czech citizens full access to the German labor market. Exploiting the fact that the reform specifically impacted the Czech and German border regions, I use a matched difference-in-differences design to estimate local labor markets effects in both countries. I show that the Czech border region experienced a decline in unemployment rates and an increase in vacancies, while local labor markets in Germany remained unaffected. Overall, my findings suggest that the Czech border region faced labor shortages, while local labor markets in Germany were able to fully absorb the migrant inflow.