Institutional Uncertainty and European Social Union: Impacts on Job Creation and Destruction in the CEECs
With the extension of its competence for social policy legislation in the Maastricht and Amsterdam treaties, the EU has adopted a significantly new social dimension in the past ten years. According to the Copenhagen criteria, the CEEC candidate countries have to adopt the former via the acquis communautaire. This paper discusses the effect of an adoption of this EU social law on future labor market performance in the CEECs. For this purpose, we model and investigate the impact of institutional uncertainty (and of its elimination) on job creation and job destruction in the CEEC candidate countries. We conclude that structural change on CEEC labor markets tends to be fostered via reducing institutional uncertainty. However, these kinds of benefits of the adoption of the acquis have to be weighed against the danger that the adoption of inefficient EU social and labor policy regulations imposed by the acquis might also entail significant risks for employment in the CEECs similar to those which have materialized in the former EU. This rather pessimistic view can be substantiated based on a public choice analysis of why the old EU members will want to impose the Social Charter even though it will harm the new members. These risks consist of a significant increase in hiring and firing costs and of higher wage rates. Based on a simple option value analysis, we investigate and evaluate the trade-off between lower institutional uncertainty and higher employment costs induced by the adoption of the acquis.
|Date of creation:||2003|
|Date of revision:|
|Contact details of provider:|| Postal: D-70593 Stuttgart|
Web page: http://www.uni-hohenheim.de/institution/institut-fuer-economics-11
More information through EDIRC
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.:
- Tito Boeri & Katherine Terrell, 2002.
"Institutional Determinants of Labor Reallocation in Transition,"
Journal of Economic Perspectives,
American Economic Association, vol. 16(1), pages 51-76, Winter.
- Tito Boeri & Katherine Terrell, 2001. "Institutional Determinants of Labor Reallocation in Transition," William Davidson Institute Working Papers Series 384, William Davidson Institute at the University of Michigan.
- Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September.
- Franz, Wolfgang, 1994.
"Central and East European labor markets in transition: Developments, causes, and cures,"
19, University of Konstanz, Center for International Labor Economics (CILE).
- Franz, Wolfgang, 1995. "Central and East European Labour Markets in Transition: Developments, Causes, and Cures," CEPR Discussion Papers 1132, C.E.P.R. Discussion Papers.
- Pindyck, Robert, 1989.
"Irreversibility, uncertainty, and investment,"
Policy Research Working Paper Series
294, The World Bank.
- Robert S. Pindyck, 1990. "Irreversibility, Uncertainty, and Investment," NBER Working Papers 3307, National Bureau of Economic Research, Inc.
- Pindyck, Robert S., 1990. "Irreversibility, uncertainty, and investment," Working papers 3137-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Ansgar Belke & Martin Hebler, 2000. "EU enlargement and labour markets in the CEECs," Intereconomics: Review of European Economic Policy, Springer, vol. 35(5), pages 219-230, September.
- Sinn, Hans-Werner, 1999.
"EU Enlargement, Migration and Lessons from German Unification,"
CEPR Discussion Papers
2174, C.E.P.R. Discussion Papers.
- Hans-Werner Sinn, 2000. "EU Enlargement, Migration, and Lessons from German Unification," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 299-314, 08.
- Hans-Werner Sinn, 1999. "EU Enlargement, Migration, and Lessons from German Unification," CESifo Working Paper Series 182, CESifo Group Munich.
- Rudiger Dornbusch, 1987. "Open Economy Macroeconomics: New Directions," NBER Working Papers 2372, National Bureau of Economic Research, Inc.
- Guiso, Luigi & Parigi, Giuseppe, 1996.
"Investment and Demand Uncertainty,"
CEPR Discussion Papers
1497, C.E.P.R. Discussion Papers.
- Belke, Ansgar & Gocke, Matthias & Hebler, Martin, 2005.
"Institutional uncertainty and European Social Union: Impacts on job creation and destruction in the CEECs,"
Journal of Policy Modeling,
Elsevier, vol. 27(3), pages 345-354, April.
- Ansgar Belke & Matthias Göcke & Martin Hebler, 2003. "Institutional Uncertainty and European Social Union: Impacts on Job Creation and Destruction in the CEECs," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 228/2003, Department of Economics, University of Hohenheim, Germany.
- Belke, Ansgar & Göcke, Matthias & Hebler, Martin, 2004. "Institutional Uncertainty and European Social Union: Impacts on Job Creation and Destruction in the CEECs," IZA Discussion Papers 1039, Institute for the Study of Labor (IZA).
- Dixit, A., 1988.
"Entry And Exit Decisions Under Uncertainty,"
91, Princeton, Department of Economics - Financial Research Center.
- Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR;CES;MSH, vol. 12(24), pages 125-176, 04.
- B Bell & Stephen Nickell, 1996.
"Would Cutting Payroll Taxes on the Unskilled Have a Significant Effect on Unemployment?,"
CEP Discussion Papers
dp0276, Centre for Economic Performance, LSE.
- Stephen Nickell & Brian Bell, 1996. "Would cutting payroll taxes on the unskilled have a significant effect on unemployment?," LSE Research Online Documents on Economics 20687, London School of Economics and Political Science, LSE Library.
- Burda, Michael C, 1998. "The Consequences of EU Enlargement for Central and Eastern European Labour Markets," CEPR Discussion Papers 1881, C.E.P.R. Discussion Papers.
- Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402.
- Feldmann, Horst, 1999. "Zehn Jahre EU-Sozialcharta," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1998 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 79(11), pages 670-676.
- Belke, Ansgar & Gocke, Matthias, 1999. "A Simple Model of Hysteresis in Employment under Exchange Rate Uncertainty," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(3), pages 260-86, August.
When requesting a correction, please mention this item's handle: RePEc:hoh:hohdip:228. 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: (Ulrike Berberich)The email address of this maintainer does not seem to be valid anymore. Please ask Ulrike Berberich to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.