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Can labour mobility reduce imbalances in the euro area?

Author

Listed:
  • Berger, Johannes
  • Strohner, Ludwig
Abstract
Labour market developments in the Euro area diverged significantly since 2008. Economic literature frequently refers to labour mobility as pillar for the functioning of currency areas. Applying the CGE model PuMA, we quantitatively analyse to what extent labour mobility can contribute to reducing imbalances within the Euro area. Our results indicate that it can temporarily reduce unemployment and increase wages in periphery countries at the cost of somewhat higher unemployment in receiving countries. Overall, economic outcomes improve slightly. Although labour mobility has a positive effect on labour market imbalances, it cannot be seen as substitute for structural reforms.

Suggested Citation

  • Berger, Johannes & Strohner, Ludwig, 2022. "Can labour mobility reduce imbalances in the euro area?," Research Papers 20, EcoAustria – Institute for Economic Research.
    • Handle: RePEc:zbw:ecoarp:20
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    More about this item

    Keywords

    international migration; wage level and structure; unemployment; general equilibrium models; Euro area;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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