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

  • Kimakova, Alena

    (Brandeis University and Commerzbank Capital Markets Eastern Europe)

  • Rajabiun, Reza

    (ASP-Kiel Institute of World Economics)

Registered author(s):

    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.

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    File URL: http://www.ihs.ac.at/publications/tec/te-9.pdf
    File Function: First version, 1999
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    Paper provided by Institute for Advanced Studies in its series Transition Economics Series with number 9.

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    Length: 30 pages
    Date of creation: May 1999
    Date of revision:
    Handle: RePEc:ihs:ihstep:9
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