Trading Nontradables: The Implications of Europe's Job-Posting Policy*.

This article analyzes the labor market effects of the European Union's posting policy, a temporary migration and trade program enabling firms to send employees abroad to provide services without formal migration or establishment in the host country. Using extensive administrative data, the study finds that posting substantially increased cross-border labor mobility in the EU—especially from low-wage Eastern European countries to Western Europe—without reducing traditional migration flows. In receiving countries, posting led to persistent employment declines for domestic workers in exposed sectors but did not affect wages, while posted workers earned significantly less than comparable domestic workers, largely due to segmented labor markets and limited labor protections. In sending countries like Portugal, firms that began posting workers abroad experienced sizable increases in sales, profits, and tax contributions, with wage gains for posted workers primarily driven by EU-enforced minimum wage regulations in destination countries. The findings highlight that posting fosters integration in previously nontradable service sectors, redistributes market shares and tax revenues from high- to low-wage countries, and underscores the role of labor market regulation in shaping the distribution of globalization's gains between labor and capital.