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Title:Are there border effects in the EU wage function? PDF Logo
Authors:Huber, Peter
Pfaffermayr, Michael
Wolfmayr, Yvonne
Issue Date:2006
Series/Report no.:CESifo working paper 1880
Abstract:We estimate a linear approximation of the market potential function for Europe as derived in geography and trade models. Using a spatial econometric estimation approach, border effects are identified by a differential impact of other regions purchasing power, depending on whether two regions are located within the EU15 or outside the EU15. We find that intra EU15-borders have an insignificant but external borders a significant effect on regional wage structures. We illustrate the magnitude of EU external border effects by simulating the enlargement of the EU in May 2004. Our results suggest a large impact of the border for new member states, but a relatively small one for old members.
JEL:F10
R12
F12
C21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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