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European Integration - A Downward Bias in Employment Policies?

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  • Torben Andersen
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    Abstract

    Even when labour mobility is low, international integration affectslabour markets by making jobs more mobile. This runs via product market integration, which is an essential element of European integration. Increasing job mobility aects the possibilities single countries perceive in pursuing employment policies. In a setting where trade is driven by comparative advantages, and thus wagecompetitiveness plays an important role for employment, it is shown that there is a tendency that a bias arises in employmentpolicies. Policies expanding private employment tend to be used too little, while policies harming private employment tend to be used too much. These effects are stronger the more integratedproduct markets are.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2001/wp-cesifo-2001-10/cesifo_wp574.pdf
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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 574.

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    Date of creation: 2001
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    Handle: RePEc:ces:ceswps:_574

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    Related research

    Keywords: spill-overs; coordination; employment.;

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    References

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    1. David E. Wildasin, 2000. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," Economic Policy, CEPR & CES & MSH, vol. 15(31), pages 337-378, October.
    2. Hans-Werner Sinn, 2001. "Social Dumping in the Transformation Process?," NBER Working Papers 8364, National Bureau of Economic Research, Inc.
    3. Devereux, Michael B, 1991. "The Terms of Trade and the International Coordination of Fiscal Policy," Economic Inquiry, Western Economic Association International, vol. 29(4), pages 720-36, October.
    4. V.V. Chari & Patrick J. Kehoe, 1989. "International coordination of fiscal policy in limiting economies," Staff Report 121, Federal Reserve Bank of Minneapolis.
    5. Cooper, Richard N., 1985. "Economic interdependence and coordination of economic policies," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 23, pages 1195-1234 Elsevier.
    6. van der Ploeg, Frederick, 1988. "International policy coordination in interdependent monetary economies," Journal of International Economics, Elsevier, vol. 25(1-2), pages 1-23, August.
    7. Jonathan Coppel & Martine Durand, 1999. "Trends in Market Openness," OECD Economics Department Working Papers 221, OECD Publishing.
    8. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
    9. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
    10. Torben M. Andersen & Niels Haldrup & Jan Rose Sørensen, 2000. "Labour market implications of EU product market integration," Economic Policy, CEPR & CES & MSH, vol. 15(30), pages 105-134, 04.
    11. K.H. Midelfart & H.G. Overman & S.J. Redding & A.J. Venables, 2000. "The location of European industry," European Economy - Economic Papers 142, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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    Cited by:
    1. Andersen, Torben M., . "The Macroeconomic Policy Mix in a Monetary Union with Flexible Inflation Targeting," Economics Working Papers 2003-2, School of Economics and Management, University of Aarhus.
    2. Andersen, Torben M, 2002. "Fiscal Stabilization Policy in a Monetary Union with Inflation Targeting," CEPR Discussion Papers 3232, C.E.P.R. Discussion Papers.

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