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An Applied General Equilibrium Analysis of EU Integration for Hungary and Slovakia

Author

Listed:
  • Kimakova, Alena

    (Brandeis University and Commerzbank Capital Markets Eastern Europe)

  • Rajabiun, Reza

    (ASP-Kiel Institute of World Economics)

Abstract

The implications of integration with the European Union on the labour markets of Central and East European transition economies have been neglected in the literature. We build an Applied General Equilibrium Model for Hungary and the Slovak Republic and simulate the integration process with specific reference to the labour markets in these economies. The results show that the effects of joining the preferential trading arrangement of the EU are context dependent. Labour markets in the Slovak Republic are more sensitive to the trade diverting effects of this form of integration than those of Hungary. This is especially the case for the utilisation of skilled labour and can be justified by the structural differences between the two economies. This would imply that Slovakia has a lower potential for building on the existing human capital capacities. For Hungary, since the EU is the dominant trading partner, the scope for diversion and the resulting structural distortions in the labour market remain limited.

Suggested Citation

  • Kimakova, Alena & Rajabiun, Reza, 1999. "An Applied General Equilibrium Analysis of EU Integration for Hungary and Slovakia," Transition Economics Series 9, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihstep:9
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    File URL: http://www.ihs.ac.at/publications/tec/te-9.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Computable general equilibrium; Transition economies; International trade; Labour; Integration;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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