Unemployment, Labour-Market Reform and Monetary Union

Lars Calmfors ()
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Lars Calmfors: Institute for International Economic Studies, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden

No 639, Seminar Papers from Stockholm University, Institute for International Economic Studies

Abstract: The paper analyses various mechanism through which monetary union in Europe may affect unemployment. The focus is on the political incentives for labour-market reform. There will be more reform outside than inside the EMU to the extent that a national inflation bias can be reduced. But if there is a precautionary motive for low average unemployment in order to reduce the utility cost of macroeconomic variability, there could be more reform in a monetary union. Labour-market reform to increase wage flexibility as a substitute for domestic monetary policy and transition costs of reform are also analysed. The net effect of monetary union on unemployment is ambiguous.

Keywords: monetary union; labour-market reform; equilibrium unemployment; discretionary monetary policy; asymmetric shocks (search for similar items in EconPapers)
JEL-codes: E58 E69 F33 J29 (search for similar items in EconPapers)
Pages: 35 pages
Date: 1998-04-01
New Economics Papers: this item is included in nep-eec and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iiessp:0639

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