DP2174 EU Enlargement, Migration and Lessons from German Unification

Author(s): Hans-Werner Sinn
Publication Date: June 1999
Keyword(s): EU enlargement, Migration, Welfare State
JEL(s): F15, F22, H5
Programme Areas: Labour Economics, Public Economics, Transition Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2174

The paper studies the role of international implications after EU enlargement. Based on a formal model with migration costs for both capital and labor, it predicts a two-sided migration from the new to the old EU countries which is later reversed. As the migration pattern chosen by market forces turns out to be efficient, migration should not be artificially reduced by means of legal constraints or subsidies to the new member countries. The paper draws the parallel with German unification and points out the lessons to be learned by Europe. The analysis concludes with a brief discussion of the second best problem posed by the existence of welfare states in the old member countries.