The Challenge of the Early Years
Edited by Marco Buti and André Sapir
Chapter 10: EMU Labour Markets Two Years On: Microeconomic Tensions and Institutional Evolution
10. EMU labour markets two years on: microeconomic tensions and institutional evolution Giuseppe Bertola and Tito Boeri* 1. INTRODUCTION The purpose of this study is to shed light on the likely impact of EMU on labour market performance and institutions. In particular, the following three broad questions are addressed: G G G In light of recent experience, theoretical insights and institutional conﬁgurations, what is the likely impact of EMU on labour market outcomes? How is EMU going to aﬀect ongoing reforms of labour market institutions and, more broadly, social protection systems for nonemployed individuals of working age? Has EMU already aﬀected labour market performance and/or the pace and nature of reforms in the relevant area? We proceed as follows. We start by characterizing the balance of employment, wage, and ﬁscal objectives and concerns in the Member Countries’ current labour market conﬁgurations, with particular attention to distributional issues. Then we move on to discuss the impact of EMU on those conﬁgurations. Finally, we assess the character of reform tensions theoretically expected and actually observed in the EMU area. Section 2 oﬀers a concise review of theoretical insights and empirical indicators on the motivation and eﬀects of labour market institutions as observed in European countries’ historical experience. Institutional features are characterized on the basis of their broad and interrelated economic and distributional implications. In general, such implications depend on the structure of markets and on the details of policy implementation. In order to illustrate the...
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