On Measuring the Costs of Labour Immobility and Market Heterogeneity in Europe

Maria Demertzis and Andrew Hughes Hallett

No 1189, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this paper we evaluate the deterioration in the European sacrifice ratio implied (both in terms of inflation and unemployment) by the fact that labour markets are structurally different and there is very little labour mobility between the European Union countries. We also consider a wage transfer effect implied by Germany's dominance. We discover that the maldistribution of unemployment rates and Germany's leadership role impose a great cost on the real side. Germany and Spain are the two countries that contribute the largest costs since they represent the two opposite extremes of the unemployment distribution.

Keywords: Heterogeneity; Measuring Sacrifice Ratios; Segmented Labour Markets; Wage Leadership (search for similar items in EconPapers)
JEL-codes: E24 J31 (search for similar items in EconPapers)
Date: 1995-06
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Citations: View citations in EconPapers (6)

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