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Integration and Search Unemployment: An Analysis of Eastern EU Enlargement

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  • Ben J. Heijdra
  • Christian Keuschnigg

Abstract

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.

Suggested Citation

  • Ben J. Heijdra & Christian Keuschnigg, 2000. "Integration and Search Unemployment: An Analysis of Eastern EU Enlargement," CESifo Working Paper Series 341, CESifo.
    • Handle: RePEc:ces:ceswps:_341
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    File URL: https://www.cesifo.org/DocDL/cesifo_wp341.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ben J Heijdra & Christian Keuschnigg & Wilhelm Kohler, 2014. "Eastern Enlargement of the EU: Jobs, Investment and Welfare in Present Member Countries," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 2, pages 37-83, World Scientific Publishing Co. Pte. Ltd..
    2. Anders Due Madsen & Morten Lobedanz Sørensen, 2002. "Effects of Trade and Market Integration in a Small Open Economy - A Dynamic CGE Approach," DREAM Working Paper Series 200203, Danish Rational Economic Agents Model, DREAM.
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