Economic Integration, Factor Mobility, and Wage Convergence
AbstractThis paper studies the effect of economic integration of two regions on the mobility of skilled and unskilled workers across regions and on the resulting location of industrial activity. In particular, it studies what happens when wages in both regions are set by the unions of the ‘West’ – the region with a greater initial relative stock of human capital. We show that in some circumstances, it is in the interest of the West’s unions to set a speed of wage convergence greater than equilibrium, thereby generating unemployment in the ‘East’. This slows the migration of human capital towards the East, but quickens the migration of raw labour towards the West. A greater share of economic activity is eventually located in the western region. Unions in the West will benefit from this, provided human capital has low migration costs relative to raw labour.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1597.
Date of creation: Mar 1997
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Gilles Saint-Paul, 1997. "Economic Integration, Factor Mobility, and Wage Convergence," International Tax and Public Finance, Springer, vol. 4(3), pages 291-306, July.
- Saint-Paul, G., 1997. "Economic Integration, Factor Mobility, and Wage Convergence," DELTA Working Papers 97-01, DELTA (Ecole normale supérieure).
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brecher, Richard A. & Choudhri, Ehsan U., 1987. "International migration versus foreign investment in the presence of unemployment," Journal of International Economics, Elsevier, vol. 23(3-4), pages 329-342, November.
- Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1993. "Does migration arbitrage regional labor market differentials?," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 211-233, April.
- Pissarides, Christopher A & McMaster, Ian, 1990. "Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 812-31, October.
- Jean-Pierre DANTHINE & Jennifer HUNT, 1992.
"Wage Bargaining Structure, Employment and Economic Integration,"
Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP)
9204, Université de Lausanne, Faculté des HEC, DEEP.
- Danthine, Jean-Pierre & Hunt, Jennifer, 1994. "Wage Bargaining Structure, Employment and Economic Integration," Economic Journal, Royal Economic Society, vol. 104(424), pages 528-41, May.
- Danthine, Jean-Pierre & Hunt, Jennifer, 1992. "Wage Bargaining Structure, Employment and Economic Integration," CEPR Discussion Papers 694, C.E.P.R. Discussion Papers.
- Schmidt, Christoph M. & Stilz, Anette & Zimmermann, Klaus F., 1994. "Mass migration, unions, and government intervention," Journal of Public Economics, Elsevier, vol. 55(2), pages 185-201, October.
- Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
- Burda, Michael C & Wyplosz, Charles, 1991.
"Human Capital, Investment and Migration in an Integrated Europe,"
CEPR Discussion Papers
614, C.E.P.R. Discussion Papers.
- Burda, Michael & Wyplosz, Charles, 1992. "Human capital, investment and migration in an integrated Europe," European Economic Review, Elsevier, vol. 36(2-3), pages 677-684, April.
- Michael Burda & Michael Funke, 1993.
"German trade unions after unification — Third degree wage discriminating monopolists?,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 129(3), pages 537-560, September.
- Burda, Michael C & Funke, Michael, 1991. "German Trade Unions After Unification: Third Degree Wage Discriminating Monopolists?," CEPR Discussion Papers 573, C.E.P.R. Discussion Papers.
- Rachel M. Friedberg & Jennifer Hunt, 1995.
"The Impact of Immigrants on Host Country Wages, Employment and Growth,"
Journal of Economic Perspectives,
American Economic Association, vol. 9(2), pages 23-44, Spring.
- Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
- Decressin, Jörg & Fatás, Antonio, 1994.
"Regional Labour Market Dynamics in Europe,"
CEPR Discussion Papers
1085, C.E.P.R. Discussion Papers.
- Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, December.
- Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
- Manfred Keil & Andrew Newell, 1993. "Internal migration and unemployment in Germany: An anglo-irish perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(3), pages 514-536, September.
- Roberto Bande & Melchor Fernandez & Víctor Manuel Montuenga, 2005.
"Regional Unemployment in Spain - Disparities, Business Cycle and Wage Setting,"
ERSA conference papers
ersa05p489, European Regional Science Association.
- Bande, Roberto & Fernández, Melchor & Montuenga, Víctor, 2008. "Regional unemployment in Spain: Disparities, business cycle and wage setting," Labour Economics, Elsevier, vol. 15(5), pages 885-914, October.
- Roberto Bande & Melchor Fernandez & Victor Montuenga, 2005. "Regional Unemployment in Spain: Disparities, Business Cycle and Wage Setting," Documentos de trabajo - Analise Economica 0035, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
- Athanasios Vamvakidis, 2008. "Regional Wage Differentiation and Wage Bargaining Systems in the EU," IMF Working Papers 08/43, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.