Employment, Wages and Immigration in the European Union: Econometric Models and Comparison with the USA, 1960-2003

Abstract

Some of the main challenges for European Union at the beginning of the 21st century are to increase the rates of employment and the real wages, particularly in those regions and economic sectors with the lowest levels, as well as to develop realistic policies of net immigration, which should have into account the limitations of EU for employment creation and growth of real Gdp, in order to avoid diminutions of average wages and social services expenditure per inhabitant. We estimate some econometric models which explain the lower rates of employment and wages of Europe in comparison with the USA, analyse those differences during the period 1960-2003 and suggest some changes in EU policies in order to increase both average wages and the rates of employment. EU immigration policies should be realistic and limited to the capacities of jobs creation, and the international cooperation of EU with developing countries should be more focused to foster investments and to increase employment and income per inhabitant in the countries of origin of immigrants.