We evaluate potential costs and benefits of Eastern enlargement of the EU. In addressing fiscal costs of enlargement in addition to tariff and non-tariff barriers, we arrive at important conclusions: 1) Overall, extending EU membership to Eastern applicants is more than worth its price to Austria. The (dynamic) gains from integration clearly outweigh the budgetary costs. 2) Somewhat surprisingly, the wage spread between skilled and unskilled labour is narrowed rather than widened. 3) Significant sectoral and intergenerational redistribution may nevertheless render EU enlargement difficult on political grounds, with the agricultural sector and the young losing out.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1786.
Find related papers by JEL classification: C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations F15 - International Economics - - Trade - - - Economic Integration
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