DP1186 Wage Inequality and Unemployment: US vs Europe

Author(s): Giuseppe Bertola , Andrea Ichino

Publication Date: May 1995

Keyword(s): Job Security , Labour Income Inequality , Regional Unemployment

JEL(s): J23 , J31

Programme Areas: Human Resources , International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP1186.asp

The radical liberalization of foreign trade in Central and Eastern Europe since 1989 has been a key part of the economic reform and has been accompanied by a full-scale geographical reorientation of international trade from East to West. Increased trade with the EU has been associated with remarkably little change in the structure of that trade, which suggests that policy should be oriented towards facilitating rather than slowing industrial adjustment. Future trade policy priorities should include continued liberalization, better coordination of trade and exchange rate policy, the attraction of foreign direct investment, resistance to pressures for selective protection, further development of trade relations with the EU and of intra-regional trade relations, and full participation in the WTO.