EU and the Migration Problem

Paper Summary:

While the initial formation of the European Union was striking in its novelty, many believed that the May, 2004 expansion that included many post-Soviet Central and Eastern European would bring new challenges. The paper shows that chief among these was the worry concerning the imbalance between the labor economies of those newly admitted nations, and that of the more affluent older members. The paper shows that although most EU members have no problem with the free trade of goods and services (without import taxes or other restrictions) across their borders, quite a few blanch at the thought of allowing free trade in the labor market as well.

From the Paper:

"One typical objection to free labor trade might be (perhaps from Germany) that German companies may try to move to cheaper (i.e. lower wage, lower property costs, etc) Eastern or Central European nations, thereby creating even larger unemployment within Germany as a result of their removal. Although on some levels, and at least temporarily, this may be true, the truth is that companies may pay less in those countries with lower labor costs, however, they will be balanced by such issues as lower productivity, and increases in other costs (perhaps materials, equipment shortages, or higher energy costs due to an older, less efficient infrastructure)."

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