Has the EMU reduced wage growth and unemployment? Testing a model of trade union behavior

Heiner Mikosch and Jan-Egbert Sturm

European Journal of Political Economy, 2012, vol. 28, issue 1, 27-37

Abstract: Grüner (2010) argues that the introduction of the European Monetary Union (EMU) led to lower wage growth and lower unemployment in participating countries. According to Grüner, monetary centralization increases the amplitude of national business cycles, which leads to higher unemployment risk. In order to counter-balance this effect, trade unions lower their claims for wage mark-ups, resulting in lower wage growth and lower unemployment. This paper uses macroeconomic data on OECD countries and a difference-in-differences approach to empirically test the implications of this model. Although we come up with some weak evidence for increased business cycle amplitudes within the EMU, we neither find a significant general effect of the EMU on wage growth nor on unemployment.

Keywords: Common currency areas; EMU; Phillips curve; Unemployment; Wages (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0176268011000784
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Has the EMU Reduced Wage Growth and Unemployment? Testing a Model of Trade Union Behaviour (2011)
Working Paper: Has the EMU Reduced Wage Growth and Unemployment? Testing a Model of Trade Union Behaviour (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:28:y:2012:i:1:p:27-37

DOI: 10.1016/j.ejpoleco.2011.08.001

Access Statistics for this article

European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().