Reduction of working time - Eastward Enlargement of the European Union
French-German Economic Forum
The discussion was based on two presentations: "Reduction of Working Time: Does it Decrease Unemployment?" by Axel Börsch-Supan (University of Mannheim, CEPR and NBER). "The Eastward Enlargement of the European Union: a New Economy for a United Europe" by Antoine-Tristan Mocilnikar (French Planning Agency, Paris). Axel Börsch- Supan presented some figures showing that Germany has reduced working time by 8% since 1980 and by over 20% since 1960. However this did not impede a huge rise in employment and a fall in the employment rate of elder workers. According to Mr Börsch-Supan, only Leon Blum in France succeeded in reducing unemployment after reducing working time in 1936, but this was due to the simultaneous fiscal stimulus. Antoine-Tristan Mocilnikar started his presentation through reminding the participants the decisions of the Cologne summit of June 3rd and 4th 1999, which fixed end-2000 as a deadline for the new Inter-Governmental Conference. He also insisted in the political aspect of enlargement, which was enhanced by the Kosovo war. After recalling some basic arithmetic of enlargement, Mr Mocilnikar showed that there was no clear relationship in the CEECs between the amount of reforms and the initial fall in GDP, but that afterwards, countries that had reformed most recovered more quickly. He provided a set of graphs showing that economic liberalisation is negatively related to average inflation, and positively linked to political freedom and to average GDP growth. He then quoted a study by Baldwin and others (1997), showing that market integration would have much more impact on CEECs GDP than a simple free-trade association agreement, because only in the former case would country risk be reduced, which would bring capital flows in. In this spirit, developing credible prospects for membership would favour direct investments from now through positive expectation effects.
Working time; Enlargment; Integration; European Union
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