Integration and Search Unemployment: An Analysis of Eastern EU Enlargement

Ben Heijdra () and Christian Keuschnigg

No 341, CESifo Working Paper Series from CESifo

Abstract: The paper develops a unified general equilibrium model including savings with overlapping generations, investment and search unemployment. Long-run analytical results for the small open economy identify capital accumulation as a prime transmission channel. The effects of integration on unemployment, however, depend importantly on the nature of wage taxation and unemployment compensation. As a separate methodological contribution, we extend a dynamic CGE model for Germany to allow for search unemployment of high- and low-skilled labour. Simulating the effects of Eastern EU enlargement, we find quantitatively small effects of integration but more pronounced labour market effects from immigration.

Keywords: Finite lives; search unemployment; capital accumulation; trade; immigration (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (5)

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