Institutional Uncertainty and European Social Union: Impacts on Job Creation and Destruction in the CEECs

Ansgar Belke, Matthias Göcke () and Martin Hebler

No 228/2003, Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim from Department of Economics, University of Hohenheim, Germany

Abstract: With the extension of its competence for social policy legislation in the Maastricht and Amsterdam treaties, the EU has adopted a significantly new social dimension in the past ten years. According to the Copenhagen criteria, the CEEC candidate countries have to adopt the former via the acquis communautaire. This paper discusses the effect of an adoption of this EU social law on future labor market performance in the CEECs. For this purpose, we model and investigate the impact of institutional uncertainty (and of its elimination) on job creation and job destruction in the CEEC candidate countries. We conclude that structural change on CEEC labor markets tends to be fostered via reducing institutional uncertainty. However, these kinds of benefits of the adoption of the acquis have to be weighed against the danger that the adoption of inefficient EU social and labor policy regulations imposed by the acquis might also entail significant risks for employment in the CEECs similar to those which have materialized in the former EU. This rather pessimistic view can be substantiated based on a public choice analysis of why the old EU members will want to impose the Social Charter even though it will harm the new members. These risks consist of a significant increase in hiring and firing costs and of higher wage rates. Based on a simple option value analysis, we investigate and evaluate the trade-off between lower institutional uncertainty and higher employment costs induced by the adoption of the acquis.

Date: 2003
New Economics Papers: this item is included in nep-eec and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.uni-hohenheim.de/RePEc/hoh/papers/228.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.uni-hohenheim.de/RePEc/hoh/papers/228.pdf [301 Moved Permanently]--> https://www.uni-hohenheim.de/RePEc/hoh/papers/228.pdf [301 Moved Permanently]--> https://projekte.uni-hohenheim.de/RePEc/hoh/papers/228.pdf)

Related works:
Journal Article: Institutional uncertainty and European Social Union: Impacts on job creation and destruction in the CEECs (2005)
Working Paper: Institutional Uncertainty and European Social Union: Impacts on Job Creation and Destruction in the CEECs (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hoh:hohdip:228

Access Statistics for this paper

More papers in Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim from Department of Economics, University of Hohenheim, Germany Contact information at EDIRC.
Bibliographic data for series maintained by Ulrike Berberich ( this e-mail address is bad, please contact ).