European Integration - a Downward Bias in Employment Policies?

30 Pages Posted: 30 Oct 2001

See all articles by Torben M. Andersen

Torben M. Andersen

University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: October 2001

Abstract

Even when labor mobility is low, international integration affects labor markets by making jobs more mobile. This runs via product market integration, which is an essential element of European integration. Increasing job mobility affects the possibilities single countries perceive in pursuing employment policies. In a setting where trade is driven by comparative advantages, and thus wage competitiveness plays an important role for employment, it is shown that there is a tendency that a bias arises in employment policies. Policies expanding private employment tend to be used too little, while policies harming private employment tend to be used too much. These effects are stronger the more integrated product markets are.

Keywords: Spill-overs, Coordination, Employment

JEL Classification: F1, F42, J23, J3

Suggested Citation

Andersen, Torben M., European Integration - a Downward Bias in Employment Policies? (October 2001). Available at SSRN: https://ssrn.com/abstract=287117

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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