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Eastern Enlargement of the EU: Jobs, Investment and Welfare in Present Member Countries

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  • Ben J. Heijdra
  • Christian Keuschnigg
  • Wilhelm Kohler
  • Christian Keuschnigg

Abstract

Eastern enlargement of the EU promises gains, but also imposes fiscal costs on incumbent countries. A sensitive issue concerns immigration, jobs and wages. We address these issues in a general equilibrium framework, both analytically and through numerical simulations. Analytical results identify capital accumulation as a prime transmission channel. Using a dynamic CGE model with search unemployment of high- and low-skilled labor, we simulate the effects of enlargement on Germany finding small e.ects from trade, but more pronounced labor market e.ects from migration. Based on German model elasticities, we approximate expected benefits and costs for other member countries as well.

Suggested Citation

  • Ben J. Heijdra & Christian Keuschnigg & Wilhelm Kohler & Christian Keuschnigg, 2002. "Eastern Enlargement of the EU: Jobs, Investment and Welfare in Present Member Countries," CESifo Working Paper Series 718, CESifo.
    • Handle: RePEc:ces:ceswps:_718
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    More about this item

    Keywords

    EU enlargement; economic integration; economic growth; capital accumulation; search unemployment; computable general equilibrium analysis;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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