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From Bismarck to Maastricht: The March to European Union and the Labor Compact

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Alan B. Krueger

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Abstract

This paper considers the likely impact that European Union (EU) will have on the labor compact. It is argued that, despite increased economic integration in Europe, countries will still be able to maintain distinct labor practices if they are willing to bear the cost of those practices. The incidence of many social protections probably already falls on workers. In addition, it is argued that imperfect mobility of capital, labor, goods and services will limit the pressure that integration will place on the labor compact. Evidence is presented suggesting that labor mobility among EU countries has not increased after the elimination of remaining restrictions on intra-EU labor mobility in 1993. Moreover, immigration from non-EU countries, which is much larger than intra-EU migration, has declined since 1993. Evidence is also reviewed suggesting that the demand for social protection rises when countries are more open, and therefore subject to more severe external shocks. This finding suggests that increased economic integration and European Monetary Union could lead to greater demand for social protection. The U.S. experience with state workers' compensation insurance programs is offered as an example of enduring differences in labor market protections in highly integrated regional economies with a common currency.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7456.

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Date of creation: Jan 2000
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Handle: RePEc:nbr:nberwo:7456

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J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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References listed on IDEAS
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Cited by:
(explanations, 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.)

  1. Giovanni Pica, 2005. "Capital Markets Integration and Labor Market Institutions," CSEF Working Papers 144, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  2. Kugler, Adriana D. & Sauer, Robert M, 2003. "Doctors without Borders: The Returns to an Occupational License for Soviet Immigrant Physicians in Israel," CEPR Discussion Papers 3683, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Kugler, Adriana D. & Sauer, Robert M., 2002. "Doctors Without Borders: The Returns to an Occupational License for Soviet Immigrant Physicians in Israel," IZA Discussion Papers 634, Institute for the Study of Labor (IZA). [Downloadable!]
  4. John T. Addison & C. R. Barrett & W. S. Siebert, 2005. "Building Blocks in the Economics of Mandates," GEMF Working Papers 2005-16, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
    Other versions:
  5. Jonas Agell, 2000. "On the Determinants of Labour Market Institutions: Rent-Sharing vs. Social Insurance," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Agell, Jonas, 2001. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," Research Papers in Economics 2001:12, Stockholm University, Department of Economics. [Downloadable!]
  7. Michael Huberman & Wayne Lewchuk, 2002. "European Economic Integration and the Labour Compact, 1850-1913," CIRANO Working Papers 2002s-34, CIRANO. [Downloadable!]
    Other versions:
  8. Fertig, Michael, 2003. "The Impact of Economic Integration on Employment – An Assessment in the Context of EU Enlargement," IZA Discussion Papers 919, Institute for the Study of Labor (IZA). [Downloadable!]
  9. Richter, Wolfram F., 2002. "Social Security and Taxation of Labour Subject to Subsidiarity and Freedom of Movement," IZA Discussion Papers 490, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Andrew Hughes Hallett & Diana N. Weymark, 2001. "The Cost of Heterogeneity in a Monetary Union," Working Papers 0128, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  11. Hughes Hallett, Andrew & Viegi, Nicola, 2001. "Labour Market Reform and Monetary Policy in EMU: Do Asymmetries Matter?," CEPR Discussion Papers 2979, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  12. Boeri, Tito, 2000. "Social Europe: Dramatic Visions and Real Complexity," CEPR Discussion Papers 2371, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Agell, Jonas, 2000. "On the Determinants of Labour Market Institutions: Rent-sharing vs. Social Insurance," Working Paper Series 2000:16, Uppsala University, Department of Economics. [Downloadable!]
  14. W. Bentley MacLeod, 2005. "Regulation or Markets? The Case of Employment Contract," IEPR Working Papers 05.17, Institute of Economic Policy Research (IEPR). [Downloadable!]
  15. Adriana Kugler & Robert Sauer, 2002. "Doctors without Borders: The Returns to an Occupational License for Soviet Immigrant Physicians in Israel," Economics Working Papers 648, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  16. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall. [Downloadable!] (restricted)
  17. Michael Fertig, 2003. "The Impact of Economic Integration on Employment – An Assessment in the Context of EU-Enlargement," RWI Discussion Papers 0007, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
  18. Gabor Kezdi, 2002. "The Geographic Mobility of Labor and the Rigidity of European Labor Markets," IEHAS Discussion Papers 0216, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  19. Agell, Jonas, 2003. "Efficiency and Equality in the Labour Market," Research Papers in Economics 2003:11, Stockholm University, Department of Economics. [Downloadable!]
  20. Vivek Dehejia & Yiagadeesen Samy, 2006. "Labor Standards and Economic Integration in the European Union: An Empirical Analysis," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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