Labor Market Effects of Economic Integration – The Impact of Re-Unification in German Border Regions

Thiess Buettner () and Johannes Rincke ()

No CESifo Working Paper No. 1179, CESifo Working Paper Series from CESifo Group Munich

Abstract: The paper argues that economic integration causes problems for the labor market of high-wage countries due to cross-border labor mobility and the accompanying increase in labor supply. Empirical evidence is provided from an analysis of regional labor market effects of German re-unification. In the aftermath of the re-unification shock, despite some gain in employment, border regions situated on the former German-German border are found to have experienced a fall in the relative wage position and an increase in unemployment relative to other West-German regions. As this points to adverse labor supply effects for resident workers due to cross-border labor mobility, this result is bad news for EU regions situated on the border with the Accession countries in Central and Eastern Europe.

Keywords: economic integration; border regions; EU enlargement; German re-unification; differences in differences estimation (search for similar items in EconPapers)
JEL-codes: F15 J61 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-geo, nep-lab and nep-tra
Date: 2004
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Related works:
Journal Article: Labor Market Effects of Economic Integration: The Impact of Re-Unification in German Border Regions (2007)
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