International Integration and Social Identity

74 Pages Posted: 2 Jul 2018 Last revised: 28 May 2020

See all articles by Boaz Abramson

Boaz Abramson

Stanford University - Department of Economics

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics

Date Written: April 30, 2020

Abstract

We study the interplay between identity politics and international integration, taking seriously accumulated research on social identity in economics and psychology. We find that, in general, a union is more fragile when periphery countries have higher status than the core. Low-status countries are less likely to secede, even when between-country differences are large and although equilibrium union policies impose significant economic hardship. Contrary to a common anticipation among union advocates, mutual solidarity is unlikely to emerge as a result of integration. Augmenting the standard model of integration with social identity helps better understand empirical patterns in decisions to leave or to join the European Union and the Eurozone.

Keywords: International Integration, Social Identity, EU, Euro, Brexit, Grexit

JEL Classification: F02, E71, D72, Z1

Suggested Citation

abramson, boaz and Shayo, Moses, International Integration and Social Identity (April 30, 2020). Available at SSRN: https://ssrn.com/abstract=3187594 or http://dx.doi.org/10.2139/ssrn.3187594

Boaz Abramson

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

Moses Shayo (Contact Author)

The Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

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