Economic Integration, Factor Mobility, and Wage Convergence
This paper studies the effect of economic integration of two regions on the mobility of skilled and unskilled workers across regions and on the resulting location of industrial activity. In particular, it studies what happens when wages in both regions are set by the unions of the ‘West’ – the region with a greater initial relative stock of human capital. We show that in some circumstances, it is in the interest of the West’s unions to set a speed of wage convergence greater than equilibrium, thereby generating unemployment in the ‘East’. This slows the migration of human capital towards the East, but quickens the migration of raw labour towards the West. A greater share of economic activity is eventually located in the western region. Unions in the West will benefit from this, provided human capital has low migration costs relative to raw labour.
|Date of creation:||Mar 1997|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Danthine, Jean-Pierre & Hunt, Jennifer, 1994.
"Wage Bargaining Structure, Employment and Economic Integration,"
Royal Economic Society, vol. 104(424), pages 528-41, May.
- Jean-Pierre DANTHINE & Jennifer HUNT, 1992. "Wage Bargaining Structure, Employment and Economic Integration," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9204, Université de Lausanne, Faculté des HEC, DEEP.
- Danthine, Jean-Pierre & Hunt, Jennifer, 1992. "Wage Bargaining Structure, Employment and Economic Integration," CEPR Discussion Papers 694, C.E.P.R. Discussion Papers.
- Decressin, Jorg & Fatas, Antonio, 1995.
"Regional labor market dynamics in Europe,"
European Economic Review,
Elsevier, vol. 39(9), pages 1627-1655, December.
- Manfred Keil & Andrew Newell, 1993. "Internal migration and unemployment in Germany: An anglo-irish perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(3), pages 514-536, September.
- Brecher, Richard A. & Choudhri, Ehsan U., 1987. "International migration versus foreign investment in the presence of unemployment," Journal of International Economics, Elsevier, vol. 23(3-4), pages 329-342, November.
- Rachel M. Friedberg & Jennifer Hunt, 1995.
"The Impact of Immigrants on Host Country Wages, Employment and Growth,"
Journal of Economic Perspectives,
American Economic Association, vol. 9(2), pages 23-44, Spring.
- Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
- Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
- Burda, Michael C & Wyplosz, Charles, 1991.
"Human Capital, Investment and Migration in an Integrated Europe,"
CEPR Discussion Papers
614, C.E.P.R. Discussion Papers.
- Burda, Michael & Wyplosz, Charles, 1992. "Human capital, investment and migration in an integrated Europe," European Economic Review, Elsevier, vol. 36(2-3), pages 677-684, April.
- Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1993. "Does migration arbitrage regional labor market differentials?," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 211-233, April.
- Michael Burda & Michael Funke, 1993.
"German trade unions after unification — Third degree wage discriminating monopolists?,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 129(3), pages 537-560, September.
- Burda, Michael C & Funke, Michael, 1991. "German Trade Unions After Unification: Third Degree Wage Discriminating Monopolists?," CEPR Discussion Papers 573, C.E.P.R. Discussion Papers.
- Schmidt, Christoph M. & Stilz, Anette & Zimmermann, Klaus F., 1994. "Mass migration, unions, and government intervention," Journal of Public Economics, Elsevier, vol. 55(2), pages 185-201, October.
- Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
- Pissarides, Christopher A & McMaster, Ian, 1990. "Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 812-31, October.
- Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, June.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1597. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()The email address of this maintainer does not seem to be valid anymore. Please ask to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.