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The Impact of Economic Integration on Employment – An Assessment in the Context of EU Enlargement

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  • Fertig, Michael

    ()
    (ISG, Cologne)

Abstract

This paper is motivated by the idea that the enlargement of the European Union is only one part of an overall process, known as economic integration, which characterizes the involvement of European economies into the global division of labor. Therefore, the paper aims at providing a quantitative and qualitative assessment of the impact of economic integration on employment and labor market dynamics in current EU-member and candidate countries. The ultimate aim of this analysis is the provision of forecasts for future labor market developments in the context of EU-enlargement. To this end, we investigate this nexus not only on an economy-wide level, but analyze whether the impact of integration varies for different sectors (automotive and financial services) of the economy. The estimation results suggest that future integration processes lead to an increase of economywide employment in the accession countries and a small, if any, rise in this outcome variable in the current EU-countries. Moreover, it could be expected that unemployment rates in the accession countries will decline somewhat, whereas those of the current EU-member states will probably experience an increase. Finally, it is very likely that the structure of employment will shift further towards a higher share of service sector employment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 919.

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Length: 26 pages
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:iza:izadps:dp919

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Keywords: factor analysis; panel data; sectoral case studies;

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References

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  1. Julius Spatz & Peter Nunnenkamp, 2002. "Globalization of the Automobile Industry � Traditional Locations under Pressure?," Kiel Working Papers 1093, Kiel Institute for the World Economy.
  2. 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.
  3. Alan B. Krueger, 2000. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," NBER Working Papers 7456, National Bureau of Economic Research, Inc.
  4. Andersen, Torben M & Herbertsson, Tryggvi Thor, 2003. "Measuring Globalization," IZA Discussion Papers 817, Institute for the Study of Labor (IZA).
  5. Walz, Uwe, 1998. "Does an enlargement of a common market stimulate growth and convergence?," Journal of International Economics, Elsevier, vol. 45(2), pages 297-321, August.
  6. Henrekson, Magnus & Torstensson, Rasha, 1996. "Growth Effects of European Integration," CEPR Discussion Papers 1465, C.E.P.R. Discussion Papers.
  7. Peter Spencer, 2001. "E-money: Will it Take Off?," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(1), pages 121-136, January.
  8. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  9. Gruner, Hans Peter & Hefeker, Carsten, 1999. " How Will EMU Affect Inflation and Unemployment in Europe?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 33-47, March.
  10. Fertig, Michael & Schmidt, Christoph M., 2000. "Aggregate-Level Migration Studies as a Tool for Forecasting Future Migration Streams," IZA Discussion Papers 183, Institute for the Study of Labor (IZA).
  11. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
  12. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720.
  13. Harman, Harry H., 1976. "Modern Factor Analysis," University of Chicago Press Economics Books, University of Chicago Press, edition 3, number 9780226316529, March.
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Cited by:
  1. Martinoia, Michela, 2009. "European integration, labour market dynamics and migration flows," POLIS Working Papers 136, Institute of Public Policy and Public Choice - POLIS.
  2. Dimitris Kallioras & George Petrakos & Georgios Fotopoulos, 2005. "Economic integration, regional structural change and cohesion in the EU new member-states," ERSA conference papers ersa05p383, European Regional Science Association.

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