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Labor Market Effects of Economic Integration - The Impact of Re-Unification in German Border Regions

  • Thiess Büttner
  • Johannes Rincke

The paper argues that economic integration causes problems for the labor market of high-wage countries due to cross-border labor mobility and the accompanying increase in labor supply. Empirical evidence is provided from an analysis of regional labor market effects of German re-unification. In the aftermath of the re-unification shock, despite some gain in employment, border regions situated on the former German-German border are found to have experienced a fall in the relative wage position and an increase in unemployment relative to other West-German regions. As this points to adverse labor supply effects for resident workers due to cross-border labor mobility, this result is bad news for EU regions situated on the border with the Accession countries in Central and Eastern Europe.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-04/cesifo1_wp1179.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1179.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1179
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  1. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  2. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," Working Papers 633, Princeton University, Department of Economics, Industrial Relations Section..
  3. Thiess Büttner & Johannes Rincke, 2004. "Labor Market Effects of Economic Integration - The Impact of Re-Unification in German Border Regions," CESifo Working Paper Series 1179, CESifo Group Munich.
  4. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  5. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
  6. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  7. Randall Filer, 1992. "The Effect of Immigrant Arrivals on Migratory Patterns of Native Workers," NBER Chapters, in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 245-270 National Bureau of Economic Research, Inc.
  8. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  9. Thiess Buettner, 1999. "The effect of unemployment, aggregate wages, and spatial contiguity on local wages: An investigation with German district level data," Papers in Regional Science, Springer, vol. 78(1), pages 47-67.
  10. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  11. Boeri, Tito & Brücker, Herbert, 2001. "Eastern Enlargement and EU-Labour-Markets: Perceptions, Challenges and Opportunities," IZA Discussion Papers 256, Institute for the Study of Labor (IZA).
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