Can labour mobility reduce imbalances in the euro area?

Johannes Berger and Ludwig Strohner

No 20, Research Papers from EcoAustria – Institute for Economic Research

Abstract: Labour market developments in the Euro area diverged significantly since 2008. Economic literature frequently refers to labour mobility as pillar for the functioning of currency areas. Applying the CGE model PuMA, we quantitatively analyse to what extent labour mobility can contribute to reducing imbalances within the Euro area. Our results indicate that it can temporarily reduce unemployment and increase wages in periphery countries at the cost of somewhat higher unemployment in receiving countries. Overall, economic outcomes improve slightly. Although labour mobility has a positive effect on labour market imbalances, it cannot be seen as substitute for structural reforms.

Keywords: international migration; wage level and structure; unemployment; general equilibrium models; Euro area (search for similar items in EconPapers)
JEL-codes: D58 F22 J11 J31 J61 J64 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eec, nep-lab and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ecoarp:20

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