International integration and social identity

Boaz Abramson, Moses Shayo*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This paper contributes to the literature incorporating social identity into international economics. We develop a theoretical framework for studying the interplay between international integration and identity politics, taking into account that both policies and identities are endogenous. We find that, in general, a union is more fragile when peripheral member countries have higher status than the politically dominant “Core” countries, as this leads in equilibrium to stronger national identification in the periphery and a lower willingness to compromise. Low-status countries are less likely to secede, even when between-country differences in optimal policies are large, and although equilibrium union policies impose significant economic hardship. Contrary to the anticipation of many union advocates, mutual solidarity is unlikely to emerge as a result of integration alone.

Original languageAmerican English
Article number103577
JournalJournal of International Economics
Volume137
DOIs
StatePublished - Jul 2022

Bibliographical note

Publisher Copyright:
© 2022

Keywords

  • Brexit
  • Currency unions
  • Eurozone
  • Grexit
  • International integration
  • Social identity

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