Labour Supply Curves for EU Member and Candidate States: An applied general equilibrium analysis. Factor Markets Working Paper No. 26, June 2012

This paper introduces a more sophisticated modelling of the labour market functioning of the European member and candidate states through the introduction of labour supply curves in an applied general equilibrium model. A labour supply curve offers a middle way in labour supply modelling, sitting between the two commonly adopted extremes of spare capacity and full employment. The first part of the paper outlines the theoretical foundation of the labour supply curve. Real world data is then used to derive labour supply curves for each member state, along with Croatia and Turkey. Finally, the impact of the newly specified labour markets on the results of an illustrative scenario involving reform of the common agricultural policy is explored. The results of computable general equilibrium analysis with the labour supply curve confirm the theoretical expectation that modelling the labour supply through an upwards-sloping curve produces results that lie between the extremes of spare capacity of the labour factor and fully employed labour. This specification captures a greater degree of heterogeneity in the labour markets of the member and candidate states, allowing for a more nuanced modelling of the effects of policy reform, including welfare effects.

Who remembers Turkey's pre-accession? CEPS Special Report No. 74/December 2012

In 2005 the EU and Turkey officially started accession negotiations that were intended to lead to Turkey’s full membership of the EU. Yet today, the Turkish accession process has virtually ground to a halt and lost all credibility. Talk of alternatives to full membership can be heard from various sides; we highlight four instances of what we call ‘parallelism’, namely the elusive concept of a ‘privileged partnership’, the EU-Turkey customs union, the recently launched ‘Positive Agenda’ and Turkish participation in the Energy Community Treaty. While a privileged partnership represents a more comprehensive but still remote framework for EU-Turkish relations, the latter three are merely an escape route from preaccession. We conclude our analysis with a discussion on Turkey’s possible membership of the European Economic Area, which in effect would serve none of the parties involved. We conclude that both partners, the EU and Turkey, would be well advised to remember their pre-accession commitments of 13 years ago – for their mutual benefit.