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Unemployment, Labour-Market Reform and Monetary Union

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  • Calmfors, Lars

    (Institute for International Economic Studies, Stockholm University)

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.

Suggested Citation

  • Calmfors, Lars, 1998. "Unemployment, Labour-Market Reform and Monetary Union," Seminar Papers 639, Stockholm University, Institute for International Economic Studies.
    • Handle: RePEc:hhs:iiessp:0639
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    References listed on IDEAS

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    Cited by:

    1. Wyplosz, Charles, 1999. "Towards A More Perfect EMU," CEPR Discussion Papers 2252, C.E.P.R. Discussion Papers.
    2. Jordahl, H. & Laseen, S., 1999. "Central Bank Conservatism and Labor Market Reform," Papers 1999:23, Uppsala - Working Paper Series.
    3. Karl Pichelmann, 2001. "Monitoring Wage Developments in EMU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(4), pages 353-373, December.
    4. Obstfeld, Maurice, 1998. "EMU: Ready, or Not?," Center for International and Development Economics Research, Working Paper Series qt8qn3v8j3, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
    5. Tryggvi Thor Herbertsson & Gylfi Zoega, 2006. "On the fringe of Europe: Iceland's currency dilemma," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(02), pages 41-51, July.
    6. Barry Eichengreen, 2000. "Solving the Currency Conundrum," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 29(3), pages 315-339, November.
    7. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
    8. Carsten Hefeker, 2000. "Structural Reforms and the Enlargement of Monetary Union," CESifo Working Paper Series 270, CESifo.
    9. Alexis Penot, 2002. "Appréciations et conséquences possibles de l'hétérogénéité structurelle de la zone euro," Revue d'Économie Financière, Programme National Persée, vol. 65(1), pages 153-175.
    10. Lucio R. Pench & Paolo Sestito & Elisabetta Frontini, 1999. "Some unpleasant arithmetics of regional unemployment in the EU. Are there any lessons for EMU?," European Economy - Economic Papers 2008 - 2015 134, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    11. PLASMANS, Joseph & MEERSMAN, Hilde & VAN POECK, André & MERLEVEDE, Bruno, 1999. "Generosity of the unemployment benefit systern and wage flexibility in EMU: Time- varying evidence in five countries," Working Papers 1999043, University of Antwerp, Faculty of Business and Economics.

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    More about this item

    Keywords

    monetary union; labour-market reform; equilibrium unemployment; discretionary monetary policy; asymmetric shocks;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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