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The Role of Borders, Languages, and Currencies as Obstacles to Labor Market Integration

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  • Fuchs-Schündeln, Nicola
  • Bartz, Kevin
Abstract
Based on a modified Spatiotemporal Autoregressive Model (STAR), we analyze whether borders still constitute significant impediments to labor market integration in the European Union, despite the formal law of free movement of labor. Using regional data from the EU-15 countries over 21 years, we find that this is the case. We further investigate whether the abolishment of border checks through the Schengen agreement or the introduction of the Euro improved our measure of labor market integration across borders, and do not find evidence in favor. Last, we investigate the role of languages, and potentially cultures, as obstacles to labor market integration. We find that indeed language borders play a larger role than country borders in explaining the lack of labor market integration across borders.

Suggested Citation

  • Fuchs-Schündeln, Nicola & Bartz, Kevin, 2012. "The Role of Borders, Languages, and Currencies as Obstacles to Labor Market Integration," CEPR Discussion Papers 8987, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8987
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    More about this item

    Keywords

    Labor market integration; European integration; Spatial econometrics;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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