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

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  • Michael Fertig

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    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 economy-wide 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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    File URL: http://repec.rwi-essen.de/files/DP_03_007.pdf
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    Bibliographic Info

    Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung in its series RWI Discussion Papers with number 0007.

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    Length: 28 pages
    Date of creation: Oct 2003
    Date of revision:
    Handle: RePEc:rwi:dpaper:0007

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    Related research

    Keywords: Factor Analysis; Panel Data; Sectoral Case Studies;

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    1. 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.
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    12. Decressin, Jörg & Fatás, Antonio, 1994. "Regional Labour Market Dynamics in Europe," CEPR Discussion Papers 1085, C.E.P.R. Discussion Papers.
    13. 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).
    14. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720.
    15. Karen Helene Midelfart-Knarvik & Henry G. Overman, 2002. "Delocation and European integration: is structural spending justified?," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 321-359, October.
    16. Harman, Harry H., 1976. "Modern Factor Analysis," University of Chicago Press Economics Books, University of Chicago Press, edition 3, number 9780226316529.
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