Eastern Enlargement of the EU: How Much is it Worth for Austria?

38 Pages Posted: 19 Aug 1999

See all articles by Wilhelm Kohler

Wilhelm Kohler

University of Tuebingen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Christian Keuschnigg

University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

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Abstract

We evaluate potential costs and benefits of Eastern enlargement of the EU. In addressing fiscal costs of enlargement in addition to tariff and nontariff barriers, we arrive at important conclusions: 1) Overall, extending EU membership to Eastern applicants is more than worth its price for Austria. The (dynamic) gains from integration clearly outweigh the budgetary costs. 2) Somewhat surprisingly, the wage spread between skilled and unskilled labor is narrowed rather than widened. 3) significant sectoral and intergenerational redistribution, however, may render EU enlargement difficult on political grounds whereby the agricultural sector and young generations are at the losing end.

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JEL Classification: C68, F13, F15

Suggested Citation

Kohler, Wilhelm K. and Keuschnigg, Christian, Eastern Enlargement of the EU: How Much is it Worth for Austria?. Available at SSRN: https://ssrn.com/abstract=166833 or http://dx.doi.org/10.2139/ssrn.166833

Wilhelm K. Kohler (Contact Author)

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Christian Keuschnigg

University of St. Gallen – Department of Economics (FGN-HSG) ( email )

Varnbuelstrasse 19
St. Gallen, 9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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