European Economic Integration and the Effectiveness of Employment Policies

K.C. Fung, Chelsea C. Lin and Andrea M. Maechler

Santa Cruz Center for International Economics, Working Paper Series from Center for International Economics, UC Santa Cruz

Abstract: This paper examines the qualitative impact and the degree of effectiveness of several labor market policies when domestic union’s wage response and economic integration are explicitly taken into account. The employment policies considered include payroll tax cuts, unemployment benefits cuts, aggregate demand expansion and wage subsidies. It is shown that with endogenous wages and an open economy, these policies can in some cases become more potent. But in other instances, they become less effective. In fact, under some conditions derived in this paper, employment policies can even be counterproductive, leading to a drop in domestic employment.

Keywords: European unemployment; economic integration; labor market (search for similar items in EconPapers)
Date: 2003-03-20
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Related works:
Journal Article: European Economic Integration and the Effectiveness of Employment Policies (2005)
Working Paper: European Economic Integration and the Effectiveness of Employment Policies (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:scciec:qt0tp8k3c5

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