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Restrictive Macroeconomic Policies and Unemployment in the European Union

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  • Marc Lombard

Abstract

This paper looks at the impact the European integration process has had on the unemployment level of European Union member countries. While the persistence of relatively high unemployment in Europe is often attributed to supply-side factors, such as the rigidities of the labour market, this study contends that the major cause for the rise of unemployment in the EU has been the very macroeconomic policies of the EU itself. The paper argues that the continuous pursuit of deflationary policies and the macroeconomic constraint imposed first by the membership of the European Monetary System and, secondly, by the convergence criteria of the Maastricht Treaty, have been the real impediments to reducing unemployment.

Suggested Citation

  • Marc Lombard, 2000. "Restrictive Macroeconomic Policies and Unemployment in the European Union," Review of Political Economy, Taylor & Francis Journals, vol. 12(3), pages 317-332.
    • Handle: RePEc:taf:revpoe:v:12:y:2000:i:3:p:317-332
    DOI: 10.1080/09538250050127481
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    References listed on IDEAS

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    1. William Vickrey, 2004. "Meaningfully Defining Deficits and Debt," Chapters, in: Mathew Forstater & Pavlina R. Tcherneva (ed.), Full Employment and Price Stability, chapter 4, pages 27-32, Edward Elgar Publishing.
    2. Eisner, Robert, 1989. "Divergences of Measurement and Theory and Some Implications for Economic Policy," American Economic Review, American Economic Association, vol. 79(1), pages 1-13, March.
    3. Paul R. Krugman, 1994. "Past and prospective causes of high unemployment," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Jan, pages 49-98.
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    Cited by:

    1. Hartwig, Jochen, 2015. "Structural change, aggregate demand and employment dynamics in the OECD, 1970–2010," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 36-45.
    2. Binotti, Annetta Maria & Ghiani, Enrico, 2008. "Changes in aggregate supply conditions in Italy: A small econometric model and its policy implications," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 1017-1039.
    3. Truger, Achim & Hein, Eckhard, 2004. "Macroeconomic co-ordination as an economic policy concept : opportunities and obstacles in the EMU," WSI Working Papers 125, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    4. Truger, Achim & Welzmüller, Rudolf (ed.), 2002. "Chancen der Währungsunion nutzen - koordinierte Politik für Beschäftigung und moderne Infrastruktur: Dokumentation des gemeinsamen Workshops von Wirtschafts- und Sozialwissenschaftlichem Institut in d," Study / edition der Hans-Böckler-Stiftung, Hans-Böckler-Stiftung, Düsseldorf, volume 64, number 64, March.
    5. Hein, Eckhard & Truger, Achim, 2002. "European Monetary Union: Nominal convergence, real divergence and slow growth? An investigation into the effects of changing macroeconomic policy institutions associated with monetary union," WSI Working Papers 107, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    6. Hein, Eckhard & Truger, Achim, 2005. "European Monetary Union: nominal convergence, real divergence and slow growth?," Structural Change and Economic Dynamics, Elsevier, vol. 16(1), pages 7-33, March.
    7. Eckhard Hein, 2002. "Monetary policy and wage bargaining in the EMU: restrictive ECB policies, high unemployment, nominal wage restraint and inflation above the target," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 299-337.
    8. Baskaran, Thushyanthan, 2009. "Did the Maastricht treaty matter for macroeconomic performance?," MPRA Paper 30106, University Library of Munich, Germany.
    9. Marc Lombard, 2009. "Economic Welfare Comparisons: Australia, the United States and the European Union," Economic Papers, The Economic Society of Australia, vol. 28(2), pages 139-147, June.
    10. Thushyanthan Baskaran, 2009. "Did the Maastricht treaty matter for macroeconomic performance? A difference‐in‐difference investigation," Kyklos, Wiley Blackwell, vol. 62(3), pages 331-358, August.
    11. Altman, Morris, 2006. "Involuntary unemployment, macroeconomic policy, and a behavioral model of the firm: Why high real wages need not cause high unemployment," Research in Economics, Elsevier, vol. 60(2), pages 97-111, June.

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