Open Borders, Transport Links, and Local Labor Markets

This article examines the labor-market impact of opening borders to low-wage countries, exploiting time and regional variation provided by the 2004 EU enlargement in combination with transport links to Sweden from new member states. Results suggest an adverse impact on earnings of present workers in the order of 1 percent in areas close to pre-existing ferry lines. Effects are present in most segments of the labor market but tend to be greater in groups with weaker positions. The impact is also clearer in industries that have received more workers from new member states and for which cross-border work is likely to be more common. There is no robust evidence for an impact on employment or wages. We discuss the potential mechanisms driving these results.