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EC4333 Lecture 1Dr Stephen Kinsella
stephen.kinsella@ul.ie
Define Integration Gains from integration BackgroundWhy integration? TimelineEconomic snapshots
Define Integration
Define Integration Gains from integration BackgroundWhy integration? TimelineEconomic snapshots
Country Death TollEconomic
Setback to Year’s GDP
Austria 525,000 1886Belgium 82,750 1924
19361938
Denmark 4,250 1936Finland 79,000 1938France 505,750 1891
Germany 6,363,000 1908Italy 355,500 1909
Netherlands 250000 1912Norway 10,250 1939-45Sweden 0 1939-45
UK 325,000 1939-45
Source: Crafts and Toniolo: Economic Growth in Europe since 1945 (Cambridge: CUP,1996, p. 4)
EU was an economic
solution to a political problem
How can Europeavoid another
war?
Steps Taken to EU
Define Integration Gains from integration BackgroundWhy integration? TimelineEconomic snapshots
2 HEADLINE INDICATORS
4
GROSS DOMESTIC PRODUCT
Chart 2.1: GDP per capita
60
80
100
120
140
160
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
highest EU3
EU15=100
EU15
lowest EU3
US
GDP per capita in Purchasing Power Standards (PPS), (EU-15=100). Contains forecast for 2002 and estimates for 1992-94.
Source: Eurostat
Chart 2.2: Real GDP growth
-2
0
2
4
6
8
10
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
highest EU3
EU15
lowest EU3
US
Growth rate of GDP at constant prices (1995=100). Contains forecast for 2002.Source: Eurostat
Per cent change on year earlier
2 HEADLINE INDICATORS
15
TRADE INTEGRATION
Chart 2.23: Trade integration of goods
0
10
20
30
40
50
60
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
highest EU3
EU15
lowest EU3
US
Value of imports and exports of goods as a per centage of GDP.
Source: Eurostat
Per cent of GDP
Chart 2.24: Trade integration of services
0
4
8
12
16
20
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
highest EU3
EU15
lowest EU3
US
Value of imports and exports of services as a percentage of GDPSource: Eurostat
Per cent of GDP
3 GENERAL ECONOMIC BACKGROUND
20
EMPLOYMENT GROWTH
Chart 3.2: Labour productivity per hour worked
50
75
100
125
150
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
highest EU3
EU15=100
EU15
lowest EU3
US
Labour productivity - GDP in PPS per hour worked relative to EU-15 (EU-15=100)
Source: Eurostat, OECD
Chart 3.3: Growth in total employment
-4
-2
0
2
4
6
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
highest EU3
Per cent change on a year earlier
EU15
lowest EU3
US
Source: Eurostat
3 GENERAL ECONOMIC BACKGROUND
21
INFLATION RATE
UNIT LABOUR COST GROWTH
Chart 3.5: Real unit labour cost
-5
-4
-3
-2
-1
0
1
2
3
4
5
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Per cent change on a year earlier
highest EU3
EU15
lowest EU3
US
Growth rate of the ratio: compensation per employee in current prices divided by GDP (in current prices) per total employment. Data contains
some estimates.
Source: Eurostat
Chart 3.4: Inflation rate
0
2
4
6
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
highest EU3
Per cent change in HICP on a year earlier
EU15
lowest EU3
US
Annual average rate of change in Harmonized Indices of Consumer Prices (HICP). Data contains estimates.
Source: Eurostat, Price statistics
Evolution of Spending, Level
2 HEADLINE INDICATORS
18
FURTHER EDUCATION
GREENHOUSE GAS EMISSIONS
Chart 2.29: Early school leavers not in further education or training
0
10
20
30
40
50
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
highest EU3
Per cent of population aged 18-24
EU15
lowest EU3
Percentage of the population aged 18-24 with at most lower secondary education and not in further education or training. Data contains estimates. Source: Eurostat, Labour Force Survey
Chart 2.30: Greenhouse gas emissions
70
80
90
100
110
120
130
140
1992 1993 1994 1995 1996 1997 1998 1999 2000
1990=100
highest EU3
EU15
lowest EU3
US
Emission of greenhouse gases, based on CO 2 equivalents; 1990 = 100. Estimate for US in 2000
Source: Eurostat
4 EMPLOYMENT
24
GENDER PAY GAP IN UNADJUSTED FORM
TAX RATE ON LOW WAGE EARNERS
Chart 4.2: Unadjusted gender pay gap
70
75
80
85
90
95
1994 1995 1996 1997 1998 1999
highest EU3
EU15
lowest EU3
Expressed as the ratio of women's average gross hourly earnings index to men's for paid employees at work for 15 or more hours a week. This
data does not control for variables such as experience, education or job type. Provisional data for Spain, estimated data for EU15.
Source: Eurostat; Sweden, France and the Netherlands data are from National Statistical Agencies
Ratio of female earnings to male earnings
Chart 4.3: Tax rate on low-wage earners
20
25
30
35
40
45
50
1996 1997 1998 1999 2000 2001
highest EU3
EU15
lowest EU3
Total income tax on gross wage earnings plus employee and employer social security contribution as a percentage of labour costs for a low wage earner (=an adult full-time production worker in manufacturing industry, without children, with a wage of 67% of the average earnings of such workers in each country). Estimated for 2001. Source: Eurostat, OECD
US
Summary
• EU an economic solution to a political problem
• But many problems with this solution
Next LectureInstitutional Analysis of EU bargainingMore HistoryMake sure to read
Beach, D., The Dynamics of European Integration, pgs. 1–31, and pgs. 214–244, 337.142 BEA.