Is the EU’s single market leading to convergence or divergence?

The EU relies on labour mobility and structural funds to help bring about economic convergence. Labour mobility enables workers to boost their living standards by moving to wealthier states, but risks concentrating skilled workers and capital in the core, compounding fiscal pressures in poorer member-states. Structural funds are indispensable, but are small compared to the transfers within individual member-states or the US. There is little doubt the single market increases the size of the pie. The question is whether the lack of convergence in living standards is sustainable politically: can national governments continue to sell the single market to their voters if it appears some countries are benefiting more than others and if large differences in living standards persist? The EU might need to transfer more money between its member-states if popular confidence in the single market is not to erode. And it will certainly need to do so if the poorer member-states are to accept a deepening of the single market.

Blog: LSE Europpblog, 07.01.16: Why the euro area needs new convergence goals and how to choose them http://bit.ly/1UxhttT

ESO: Background information: Why the Eurozone can’t agree on convergence. And how structural reforms can help http://www.europeansources.info/record/why-the-eurozone-cant-agree-on-convergence-and-how-structural-reforms-can-help/

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