Abstract
This paper provides general-equilibrium estimates of the welfare gains and unemployment changes that may be expected from the single European market. The investigation uses a multicountry, multisector applied model with imperfection. The analysis is performed assuming three alternative wage determination mechanisms (flexible wages, wage indexation and efficiency-wage model). Labor market imperfection allows for the existence of involuntary unemployment rate. The main contribution in the paper is that economic integration could imply deterioration in employment in Europe.
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