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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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-10/cesifo_wp341.pdf
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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
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Handle: RePEc:ces:ceswps:_341
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