Is Europe an Optimal Political Area?

73 Pages Posted: 10 Jun 2017

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Guido Tabellini

Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Francesco Trebbi

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

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Date Written: May 22, 2017

Abstract

Employing a wide range of individual-level surveys, we study the extent of cultural and institutional heterogeneity within the EU and how this changed between 1980 and 2008. We present several novel empirical regularities that paint a complex picture. While Europe has experienced both systematic economic convergence and an increased coordination across national and subnational business cycles since 1980, this was not accompanied by cultural nor institutional convergence. Such persistent heterogeneity does not necessarily spell doom for further political integration, however. Compared to observed heterogeneity within member states themselves, or in well functioning federations such as the US, cultural diversity across EU members is a similar order of magnitude. The main stumbling block on the road to further political integration may not be heterogeneity in fundamental cultural traits, but other cleavages, such as national identities.

Suggested Citation

Alesina, Alberto F. and Tabellini, Guido and Trebbi, Francesco, Is Europe an Optimal Political Area? (May 22, 2017). CESifo Working Paper Series No. 6469, Available at SSRN: https://ssrn.com/abstract=2983690 or http://dx.doi.org/10.2139/ssrn.2983690

Alberto F. Alesina

Harvard University - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Guido Tabellini (Contact Author)

Bocconi University - Department of Economics ( email )

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Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

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Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

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Francesco Trebbi

University of California, Berkeley - Haas School of Business ( email )

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Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

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