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Title:Eastern Enlargement of the EU : A Comprehensive Welfare Assessment PDF Logo
Authors:Kohler, Wilhelm K.
Issue Date:2004
Series/Report no.:HWWA Discussion Paper 260
Abstract:This paper takes a welfare-view on eastern enlargement of the EU, focusing on incumbent countries. Enlargement is decomposed into three elements: Single-market integration on commodity markets, budgetary costs from EU-expenditure policies, and singlemarket- induced migration from new to present member countries. I first use an analytical model to derive a welfare equation that identifies the principle channels for incumbent country welfare gains and losses from enlargement, including product differentiation, capital accumulation, and unemployment due to search-costs. I then propose a method that allows to extend welfare results obtained from a detailed calibrated version of this model for Germany to other incumbent countries. The approach relies on model elasticities extracted from the German model which are then applied to other countries´ idiosyncratic "enlargement-shocks". Constructing detailed indices for such country specific "enlargement-shocks", I arrive at characteristic inter-country pattern of enlargement- induced welfare effects for all EU15 countries. Aggregating these across countries reveals enlargement to be beneficial for the union as a whole, although several countries stand to suffer welfare losses.
Subjects:EU Enlargement
Economic Integration
Commercial Policy
Migration
Welfare Analysis
Computable General Equilibrium
Search Unemployment
JEL:F12
F22
F02
F15
F13
Document Type:Working Paper
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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