Eastern Enlargement of the EU: How Much Is It Worth for Austria?

Christian Keuschnigg and Wilhelm Kohler

Review of International Economics, 2002, vol. 10, issue 2, 324-342

Abstract: For present member countries, eastern EU enlargement entails gains from integration as well as fiscal costs. The authors use a calibrated model to quantify the dynamic effects of discriminatory trade liberalization and immigration from eastern applicants. It is found that enlargement is expansionary and yields a remarkable fiscal dividend. Surprisingly, integration compresses the wage spread between skilled and unskilled labor. Overall, the (dynamic) gains from integration clearly outweigh the fiscal cost. While ambiguous a priori, enlargement is found to hold a remarkable net welfare gain for Austria.

Date: 2002
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Working Paper: Eastern Enlargement of the EU: How much is it Worth for Austria? (1998)
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