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Sectoral impact of free intra-EU migration in the presence of unemployment benefits

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  • Helena Marques
  • Hugh Metcalf

Abstract

This paper builds a multi-sector, three country (centre and two peripheries), New Economic Geography model, where industrial sectors differ in the degree of scale economies and skill-intensity. The model incorporates, for the first time in this class of models, payments to the unemployed in each country. The model is used to evaluate the impact of migration in the enlarged EU, and would also be directly relevant for the NAFTA countries, under a range of possible migration scenarios involving three types of workers: skilled, unskilled, and unemployed. Full migration is the only scenario in which the central country obtains an increase in both skilled and unskilled wages and employment levels. The obverse is true for the two peripheral countries, they lose firms and real wages decline. As a consequence, the central country has an interest in allowing for full migration but the two peripheral countries have an interest in restricting migration.

Suggested Citation

  • Helena Marques & Hugh Metcalf, 2005. "Sectoral impact of free intra-EU migration in the presence of unemployment benefits," DEGIT Conference Papers c010_034, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c010_034
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    File URL: http://degit.sam.sdu.dk/papers/degit_10/C010_034.pdf
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    References listed on IDEAS

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    1. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    2. Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
    3. Krugman, Paul & Venables, Anthony J., 1996. "Integration, specialization, and adjustment," European Economic Review, Elsevier, vol. 40(3-5), pages 959-967, April.
    4. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
    5. Baldwin, R.E. & Forslid, R. & Haaland, J.I. & Knarvik, K.H.M., 2000. "EU Integration and Outsiders. A Simulation Study of industrial Location," Papers 2/2000, Norwegian School of Economics and Business Administration-.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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