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IZA
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The Impact of Economic Integration on Employment – An Assessment in the Context of EU Enlargement
by
Michael Fertig
(October 2003)
Abstract:
This paper is motivated by the idea that the enlargement of the European Union is only one
part of an overall process, known as economic integration, which characterizes the
involvement of European economies into the global division of labor. Therefore, the paper
aims at providing a quantitative and qualitative assessment of the impact of economic
integration on employment and labor market dynamics in current EU-member and candidate
countries. The ultimate aim of this analysis is the provision of forecasts for future labor
market developments in the context of EU-enlargement. To this end, we investigate this
nexus not only on an economy-wide level, but analyze whether the impact of integration
varies for different sectors (automotive and financial services) of the economy. The
estimation results suggest that future integration processes lead to an increase of economywide
employment in the accession countries and a small, if any, rise in this outcome variable
in the current EU-countries. Moreover, it could be expected that unemployment rates in the
accession countries will decline somewhat, whereas those of the current EU-member states
will probably experience an increase. Finally, it is very likely that the structure of employment
will shift further towards a higher share of service sector employment.
Text: See Discussion Paper No. 919
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