Varieties, Jobs and EU Enlargement
Small open economies can grow faster than their neighbours without running into a balance of payment crises if they succeed in increasing the number of differentiated goods produced domestically. A further increase in the number of varieties produced in Central and Eastern Europe will require more worker and job re-allocation as production is still largely concentrated in homogeneous good and scale-intensive industries and enterprise density is significantly lower than in Western Europe. Unemployment benefits can support this process by providing seed capital for self-employment choices. But they should be neither too low nor too high. Otherwise, they would prevent restructuring or discourage job search.
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Volume (Year): 92 (2002)
Issue (Month): 1 (January-February)
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