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The European Immigration Crisis
Airbus Chief: Germany Must Open Labor Markets to Help Immigrants
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  • Greg Olsen

    The difficulty for labor to migrate within the EU has been one of the barriers to the Eurozone becoming an optimal currency area (OCA). Under Mundell’s original 1961 paper on OCAs, there are three conditions that must be met for a currency area to be optimal: (1) free flow of capital, (2) free flow of labor and (3) synchronized business cycles. The Eurozone meets the first criterion only. Making it easier for labor to migrate will help although some barriers cannot be controlled by policy makers, such as language. The EU has not solved the third yet. Without synchronized business cycles, the monetary policy of the ECB will always be too tight for some and too loose for other states.

    The United States is an OCA, because it is relatively easy for populations to move between states–e.g., the Okies to California, poor from the South to the industrial Midwest, now from over regulated California to Texas and the rust belt back to the right-to-work South. There may be significant cultural differences between regions of the U.S., cf. the classic book, The Nine Nations of North America, but at least everybody speaks the same language and for the most part educational qualifications translate (the big weakness is professional and vocational licensing which differs radically from state to state).

    • Andrew Allison

      Don’t confuse the EU with the eurozone. Labour has been free to migrate (witness, for example, the roughly 600,000 Poles working in the UK). The eurozone problems are an entirely different kettle of incompatibilities.

  • Jim__L

    Expect every native German who feels the unfairness of changing the rules for immigrants, to contribute to bringing what were once far-right parties into the mainstream…

  • Gene

    First of all, since when has “the initial shock of the European refugee crisis” already passed? My friend, the shock is just getting warmed up.

    And the last time I checked, there weren’t a lot of German speakers in the Arab world (though there are a lot of Nazi speakers, I’ll grant them that). How the hell would one of these college degree holders be able to do anything for Tom Enders?

    This post is high on glib and low on analysis. Was it really that important to get an extra post up today?

  • Fat_Man

    Just plain delusional. These “refugees” have no skills, can’t speak European languages, and will never be employable in any advanced economy except as the most menial labor. This is a total disaster in the making.

  • Jacksonian_Libertarian

    “German unemployment and labor participation rates are relatively healthy, if slightly behind the U.S., but as you move south to Italy or west to France, the bottom drops out: youth unemployment is at 40 and 25 percent respectively.”

    Labor participation rates in the US are at miserable multi decade lows, if Germany’s aren’t even that good, then they are very bad indeed.

    “A record 93,626,000 Americans 16 or older did not participate in the nation’s labor force in June, as the labor force participation rate dropped to 62.6 percent, a 38-year low, according to the Bureau of Labor Statistics. (July 2015)”

    Welcome to “Great Depression 2.0”, we should hope it doesn’t lead to a World War as “Great Depression 1.0” did.

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