Contents -- I. Introduction -- II. Cross-Border Labor Flows -- III. A General Equilibrium Model with Labor Mobility -- A. Model Setup -- Consumer Problem -- Producer Problems -- Aggregate Resource Constraints -- B. Definition of Equilibrium -- C. Characterization of Equilibrium -- Functional Forms and Parameterization -- Case 1: Impact of Cross-Border Labor Mobility on Convergence -- Case 2: Impact When Adjustment Costs are Large -- Case 3: Pace of Productivity Convergence and the Boom and Bust Cycle -- IV. Policy Challenges -- A. Managing Volatility -- Symptoms of Overheating -- ... Or Business As Usual? -- Labor Mobility's Cushioning Role -- Demand-Management Policies -- B. Fostering Growth -- Mobilizing Labor Supply and Employment -- Reducing Labor Market Mismatches -- V. Conclusion -- References -- Tables -- 1. New Member States: Net Migration Rates, 1992-2007 -- 2. Largest Source Countries for Immigration in OECD European Countries, 2000 and 2005.. -- 3. Parameter Values and Initial Conditions -- Figures -- 1. Residents from the NMS-8 in the EU-15, 2000-2006 -- 2. New Member States: Income per Capita Relative to EU-27, 2000 and 2007 -- 3. Simulations with Minimal Factor Adjustment Costs -- 4. Simulations with Larger Factor Adjustment Costs -- 5. Response of Cross-Border Labor Flows to Selected Convergence Scenarios -- 6. New Member States: Real Wage Developments, 2004-2008:Q1 -- 7. New Member States: Job Vacancy Rates, 2005-07 -- 8. New Member States: Employment Rate, 2000-07 -- 9. New Member States: Unemployment Rate, 2000-08.