From Bismarck to Maastricht: The March to European Union and the Labor Compact
AbstractThis 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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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7456.
Date of creation: Jan 2000
Date of revision:
Publication status: published as Labour Economics, Vol. 7, no. 2 (March 2000): 117-134
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Other versions of this item:
- Alan Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
- J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-01-11 (All new papers)
- NEP-EEC-2000-01-25 (European Economics)
- NEP-HIS-2000-01-11 (Business, Economic & Financial History)
- NEP-LAB-2000-01-11 (Labour Economics)
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