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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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  17. Burda, Michael C. & Weder, Mark, 1998. "Endogenes Wachstum, gleichgewichtige Arbeitslosigkeit und persistente Konjunkturzyklen," SFB 373 Discussion Papers 1999,9, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
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