Download this Paper Open PDF in Browser

European Economic Integration and the Effectiveness of Employment Policies

24 Pages Posted: 27 May 2003  

K. C. Fung

University of California at Santa Cruz

Chelsea Lin

National Dong Hwa University

Andrea Maechler

University of California, Santa Cruz - Department of Economics

Date Written: March 20, 2003

Abstract

This paper examines the qualitative impact and the degree of effectiveness of several labor market policies when domestic union's wage response and economic integration are explicitly taken into account. The employment policies considered include payroll tax cuts, unemployment benefits cuts, aggregate demand expansion and wage subsidies. It is shown that with endogenous wages and an open economy, these policies can in some cases become more potent. But in other instances, they become less effective. In fact, under some conditions derived in this paper, employment policies can even be counterproductive, leading to a drop in domestic employment.

Keywords: European unemployment, economic integration, labor market structure

JEL Classification: F15, F42, L51

Suggested Citation

Fung, K. C. and Lin, Chelsea and Maechler, Andrea, European Economic Integration and the Effectiveness of Employment Policies (March 20, 2003). UC Santa Cruz Economics Working Paper No. 03-5. Available at SSRN: https://ssrn.com/abstract=394280

K.C. Fung (Contact Author)

University of California at Santa Cruz ( email )

Santa Cruz, CA 95064
United States
831-459-3273 (Phone)
831-459-5900 (Fax)

Chelsea Lin

National Dong Hwa University

No. 1, Sec. 2, Da Hsueh Rd.
Shoufeng, Hualien 97401
Taiwan

Andrea Maechler

University of California, Santa Cruz - Department of Economics ( email )

Santa Cruz, CA 95064
United States
831-495-5201 (Phone)
831-495-5900 (Fax)

Paper statistics

Downloads
57
Rank
311,542
Abstract Views
761