Faculty of Economics and Business Administration Publications Database

The Role of Borders, Languages, and Currencies as Obstacles to Labor Market Integration

Bartz, Kevin
Volume: 56
Number: 6
Pages: 1148 - 1163
Month: August
ISSN-Print: 0014-2921
Link External Source: Online Version
Year: 2012
Keywords: Labor Market Integration; European Integration; Spatiotemporal Autoregressive Model
Abstract: Based on a modified Spatiotemporal Autoregressive Model (STAR), we analyze whether borders still constitute significant impediments to labor market integration in the European Union, despite the formal law of free movement of labor. Using regional data from the EU-15 countries over 21 years, we find that this is the case. We further investigate whether the abolishment of border checks through the Schengen agreement or the introduction of the Euro improved our measure of labor market integration across borders, and do not find evidence in favor. Last, we investigate the role of languages, and potentially cultures, as obstacles to labor market integration. We find that indeed language borders play a larger role than country borders in explaining the lack of labor market integration across borders.