The Eastern Enlargement of the Eurozone and Labour Market Adjustment

Jaakko Kiander, Risto Vaittinen and Tiiu Paas

Eastward Enlargement of the Euro-zone Working Papers from Free University Berlin, Jean Monnet Centre of Excellence

Abstract: This paper analyses the economic effects of the eastern enlargement of the EU both on the existing Member States and the candidate countries using simulation results of a dynamic computable general equilibrium model. In addition to conventional trade policy impacts such as custom union formation and common agricultural policy the effects of factor mobility, induced by institutional changes, are analyzed. The analysis is based on six different scenarios. According to the results EU membership will accelerate growth in output, investment and consumption in the candidate countries in all scenarios. However, it turns out that factor mobility effects dominate those of conventional trade policy. Growth in national income will lag behind GDP growth because profits will be paid out to foreign investors. Migration will slow output growth in the candidate countries and accelerate growth in the existing Member States, while the trends in per capita consumption will be reversed; migration increases per capita consumption in the new Member States and reduces it slightly in the existing ones.

Keywords: Eastern enlargement of the EU; General equilibrium modeling; Integration; Migration; Trade policy (search for similar items in EconPapers)
JEL-codes: C68 F10 F15 R23 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2002-08-01, Revised 2002-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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