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Der Euro als Jobmaschine? Zu den Auswirkungen des Euro auf den deutschen Arbeitsmarkt

Author

Listed:
  • Franz, Wolfgang

    (ZEW Mannheim)

Abstract

This paper analyzes the potential advantages and disadvantages of the introduction of the common European currency for the German labor market. First, experiences of the German currency union of 1990 cannot be transferred to the European case. Second, the loss of the instrument of nominal exchange rates per se should not be exaggerated, since, empirically, volatility among the European currencies is relatively low already and is mostly due to speculative capital flows which destroyed jobs in the past. Decreased transaction costs might have a positive effect on employment. On the other hand, the Euro will not create additional pressure on national market structres to adapt to increased competition. This is done by the persistent relevance of real exchange rates and the European Single Market. While higher mobility of labor might not be a desirable substitute for the buffer function of national monetary policy, there will be an increased need for wage flexibility in order to avoid negative impacts of asymmetric shocks. Increased intra-European transfers are no alternative due to their negative incentives for economic reform. Excessive wages, however, were not alimentated by the German Bundesbank either, and wage setting cannot be solely held responsible for high unemployment in situations of recession and mismatch in the labor market. Assessing these aspects of EMU, one should not expect massive positive employment effects of the Euro.

Suggested Citation

  • Franz, Wolfgang, 1998. "Der Euro als Jobmaschine? Zu den Auswirkungen des Euro auf den deutschen Arbeitsmarkt," IZA Discussion Papers 9, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9
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    Citations

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    Cited by:

    1. Patrick A. Puhani, 2001. "Labour Mobility: An Adjustment Mechanism in Euroland? Empirical Evidence for Western Germany, France and Italy," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 127-140, May.
    2. Puhani, Patrick A., 1999. "Labour Mobility - An Adjustment Mechanism in Euroland?," IZA Discussion Papers 34, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    euroean monetary integration; labor market adjustment; unemployment;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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