From what I can tell, young people move to where the job market is hot (e.g. Germany) to work and that's pretty much it. They might return when they retire (but let's face it, after 30 years, they'll have a life and friends and a family in Germany, and they'll likely stay), or, if you're Spain or Portugal, you might get some German retirees in return, but it doesn't seem to do much closing the gap.
Essentially, local companies just can't hire people locally, and they can't raise their wages easily, because it's still a single market, so they'll compete with every other company on that single market, and the most efficient one (or the one where government subsidies are hidden the best) wins. If you have fewer people to hire, your best chance is probably to move your company to where the people are.
If people move out of lower wage countries to where the well-paying jobs are, then it will become harder in those countries to hire people at low wages, driving the wages up.
Of course that shouldn't be the only factor, and it isn't; the EU also invests in its poorer members. Ireland in particular is a massive success story in that regard. It was poor when it joined the EU, and now it's rich. I hope more countries will follow that path, but obviously there are tons of other factors at work as well; government policies, corruption, etc.
> it will become harder in those countries to hire people at low wages, driving the wages up
Sure, if there's demand for jobs. But when you can't hire people, how do you keep your company running? And how do you compete without the appropriate number of people? Not being able to hire has an effect on the economy as well, and companies will likely be outcompeted by those that can hire. And if the company goes away, who's trying to hire people, driving up the wages?
I believe that's why you'll often see a combination of high unemployment, low wages and high emigration.
And sure, investments will work, but I'm not sure if you can replicate Ireland's success to e.g. Portugal or Spain. You can't turn every country into a tax-scheme for multinational corporations with a friendly regulatory environment regarding privacy, we don't have enough Googles and Facebooks for that, and transitioning that into continuing success isn't as easy when your country isn't English speaking.
We were talking about companies moving production there to take advantage of lower wages, weren't we? So presumably the jobs are there. If they aren't, like I said, investment is very important, and the EU does that to some extent. It's worked very well for some countries, but not (yet?) so much for some others.
We'll see how it plays out, but in general, I'd say that if goods, services and money can cross borders with no problems, people should be able to do the same.
From what I can tell, young people move to where the job market is hot (e.g. Germany) to work and that's pretty much it. They might return when they retire (but let's face it, after 30 years, they'll have a life and friends and a family in Germany, and they'll likely stay), or, if you're Spain or Portugal, you might get some German retirees in return, but it doesn't seem to do much closing the gap.
Essentially, local companies just can't hire people locally, and they can't raise their wages easily, because it's still a single market, so they'll compete with every other company on that single market, and the most efficient one (or the one where government subsidies are hidden the best) wins. If you have fewer people to hire, your best chance is probably to move your company to where the people are.