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How Does Economic Integration Influence Employment And Wages In Border Regions? The Case Of The EU-enlargement 2004 And Germany?s Eastern Border

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Executive Summary

This paper considers the (short run) employment and wage effects of the 2004 EU-enlargement on firms located close to Germany's Eastern border. The author use a 50% sample of Germans plants and apply difference-in-differences-estimators combined with a matching approach. They evaluate changes in total employment, the employment shares of low-skilled and Eastern European workers and the wages for low-skilled, skilled and high-skilled workers in various sectors. The results suggest negative (short-run) effects of the EU-enlargement on employment in construction and the business services sector, where they also find negative wage effects. Wages and employment in manufacturing, wholesale and retail trade, hotels and restaurants and social and personal service activities seem to have been relatively less affected.

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