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

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  • Demertzis, Maria
  • Hughes Hallett, Andrew

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.

Suggested Citation

  • Demertzis, Maria & Hughes Hallett, Andrew, 1995. "On Measuring the Costs of Labour Immobility and Market Heterogeneity in Europe," CEPR Discussion Papers 1189, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1189
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    Citations

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    Cited by:

    1. Toni Mora & Jordi Lopez-Tamayo & Jordi Surinach, 2005. "Are wages and productivity converging simultaneously in Euro-area countries?," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 2001-2008.
    2. Agiomirgianakis, George M., 1998. "Monetary Policy Games and International Migration of Labor in Interdependent Economies," Journal of Macroeconomics, Elsevier, vol. 20(2), pages 243-266, April.
    3. Agiomirgianakis, George & Zervoyianni, Athina, 2001. "Macroeconomic equilibrium with illegal immigration," Economic Modelling, Elsevier, vol. 18(2), pages 181-202, April.
    4. Tani, Massimiliano, 2003. "Have Europeans become more mobile? A note on regional evolutions in the EU: 1988-1997," Economics Letters, Elsevier, vol. 80(1), pages 23-30, July.
    5. Demertzis, Maria & Hallett, Andrew Hughes, 1998. "Asymmetric transmission mechanisms and the rise in European unemployment: A case of structural differences or of policy failures?," Journal of Economic Dynamics and Control, Elsevier, vol. 22(6), pages 869-886, June.
    6. Fousekis, Panos, 2011. "Cost Competitiveness in the Food, Beverages and Tobacco Manufacturing of the EU and the USA: A Convergence Analysis," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 8(2).

    More about this item

    Keywords

    Heterogeneity; Measuring Sacrifice Ratios; Segmented Labour Markets; Wage Leadership;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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