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An Applied General Equilibrium Analysis of EU Integration for Hungary and Slovakia

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Author Info
Kimakova, Alena (Brandeis University and Commerzbank Capital Markets Eastern Europe)
Rajabiun, Reza (ASP-Kiel Institute of World Economics)
Abstract

The implications of integration with the European Union on the labour markets of Central and East European transition economies have been neglected in the literature. We build an Applied General Equilibrium Model for Hungary and the Slovak Republic and simulate the integration process with specific reference to the labour markets in these economies. The results show that the effects of joining the preferential trading arrangement of the EU are context dependent. Labour markets in the Slovak Republic are more sensitive to the trade diverting effects of this form of integration than those of Hungary. This is especially the case for the utilisation of skilled labour and can be justified by the structural differences between the two economies. This would imply that Slovakia has a lower potential for building on the existing human capital capacities. For Hungary, since the EU is the dominant trading partner, the scope for diversion and the resulting structural distortions in the labour market remain limited.

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File URL: http://www.ihs.ac.at/publications/tec/te-9.pdf
File Format: application/pdf
File Function: First version, 1999
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Publisher Info
Paper provided by Institute for Advanced Studies in its series Transition Economics Series with number 9.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 30 pages
Date of creation: May 1999
Date of revision:
Handle: RePEc:ihs:ihstep:9

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Related research
Keywords: Computable general equilibrium; Transition economies; International trade; Labour; Integration;

Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
F15 - International Economics - - Trade - - - Economic Integration
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Linkages

References listed on IDEAS
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  1. Damien NEVEN, 1994. "Trade Liberalisation with Eastern Nations. How Sensitive ?," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9407, Université de Lausanne, Faculté des HEC, DEEP.
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  2. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "Capturing NAFTA's impact with applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 17-34. [Downloadable!]
  3. Mercenier, J. & Sampaio De Souza, M.D.C., 1989. "A Decentralized Multisector Intertemporal General Equilibrium Evaluation Of Brazil'S Protectionism," Cahiers de recherche 8943, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    Other versions:
  4. Harrison, Glenn W & Rutherford, Thomas F & Wooton, Ian, 1991. "An Empirical Database for a General Equilibrium Model of the European Communities," Empirical Economics, Springer, vol. 16(1), pages 95-120.
  5. Rodrik, Dani, 1994. "Do Low-Income Countries Have a High-Wage Option?," CEPR Discussion Papers 862, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Harris, Richard, 1984. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," American Economic Review, American Economic Association, vol. 74(5), pages 1016-32, December. [Downloadable!] (restricted)
  7. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-26, October. [Downloadable!] (restricted)
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  8. Jean Mercenier, 1994. "Nonuniqueness of solutions in applied general equilibrium models with scale economies and imperfect competition," Staff Report 183, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  9. Michaely, Michael, 1998. "Partners to a preferential trade agreement: Implications of varying size," Journal of International Economics, Elsevier, vol. 46(1), pages 73-85, October. [Downloadable!] (restricted)
  10. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, 05. [Downloadable!] (restricted)
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  11. Ricardo J. Caballero & Mohamad L. Hammour, 1998. "The Macroeconomics of Specificity," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 724-767, August. [Downloadable!] (restricted)
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  12. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CES, MSH, vol. 12(24), pages 125-176, 04. [Downloadable!] (restricted)
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  14. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September. [Downloadable!] (restricted)
  15. Keuschnigg, Christian & Kohler, Wilhelm K., 1998. "Eastern Enlargement of the EU: How much is it Worth for Austria?," CEPR Discussion Papers 1786, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 1997. "Trade policy options for Chile : a quantitative evaluation," Policy Research Working Paper Series 1783, The World Bank. [Downloadable!]
  17. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "A primer on static applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-16. [Downloadable!]
  18. Jean Mercenier & Nicolas Schmitt, 1995. "On sunk costs and trade liberalization in applied general equilibrium," Staff Report 188, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  19. Erik Faucompret & Jozef Konings & Hylke Vandenbussche, 1998. "The Integration of Central and Eastern Europe in the European Union: Trade and Labour Market Adjustment," LICOS Discussion Papers 7598, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  20. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February. [Downloadable!] (restricted)
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