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Integration and Search Unemployment: An Analysis of Eastern EU Enlargement

  • Ben J. Heijdra
  • Christian Keuschnigg

The paper develops a unified general equilibrium model including savings with overlapping generations, investment and search unemployment. Long-run analytical results for the small open economy identify capital accumulation as a prime transmission channel. The effects of integration on unemployment, however, depend importantly on the nature of wage taxation and unemployment compensation. As a separate methodological contribution, we extend a dynamic CGE model for Germany to allow for search unemployment of high- and low-skilled labour. Simulating the effects of Eastern EU enlargement, we find quantitatively small effects of integration but more pronounced labour market effects from immigration.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 341.

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Date of creation: 2000
Date of revision:
Handle: RePEc:ces:ceswps:_341
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  9. Martín Rama & Guido Tabellini, . "Lobbying by Capital and Labor over Trade and Labor Market Policies," Working Papers 94, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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  16. Keuschnigg, Christian & Kohler, Wilhelm, 2002. "Eastern Enlargement of the EU: How Much Is It Worth for Austria?," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 324-42, May.
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  19. Matusz, Steven J, 1996. "International Trade, the Division of Labor, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 71-84, February.
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  23. Gang, Ira N. & Rivera-Batiz, Francisco L. & Yun, Myeong-Su, 1999. "Immigrants and Unemployment in the European Community," IZA Discussion Papers 70, Institute for the Study of Labor (IZA).
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  29. Merz, Monika, 1999. "Heterogeneous job-matches and the cyclical behavior of labor turnover," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 91-124, February.
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