16 December 2007
Event background
Competitive Europe - Social Europe: partners or rivals?
Dublin, 1-3 November 2006
The Lisbon competitiveness goal - feasible, appropriate or even desirable? Europe and the new division of labour
Abstract by Hans-Werner Sinn
The fall of the iron curtain, EU enlargement, the Euro and the EU internal market induce a massive restructuring of the continent, whereby capital flows to the previously disadvantaged regions and labour migrates in the reverse direction. By outsourcing and offshoring firms in the West, in Germany in particular, make use of the new investment possibilities offered to them in low wage countries. Production depth declines and industrial jobs disappear.
The question addressed is to what extent this can be interpreted as an improvement in the international division of labour. For Germany, at least, the answer seems to be negative for the time being. The rigidities of the labour market which, to a great extent, result from the repercussions of a welfare state paying wage replacement incomes, lead to overspecialisation and other excessive flight reactions that cause increasing unemployment.
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