Edited by Ramón Gómez-Salvador, Ana Lamo, Barbara Petrongolo, Melanie Ward and Etienne Wasmer
LABOUR SUPPLY IN A NEW EUROPE
Francesco Paolo Mongelli To open the panel discussion, I have assembled some ‘early’ empirical evidence on labour market dimensions since the start of EMU (that is, Stage Three of EMU and the run up to it). Some views that had been put forward on the possible eﬀects of EMU were also reviewed. First of all we might ask why should EMU have any eﬀects? What forces might monetary integration unleash or catalyse that did not exist before? There are diverse market-based forces. Some costs will disappear or fall. The introduction of the euro will contribute, amongst other eﬀects, to reducing trading costs both directly and indirectly; for example, by removing exchange rate risks and the cost of currency hedging (although we know that there are diﬀerent views on this cost). Some information costs will be reduced. The euro is expected to have a catalysing role for the Single Market Programme by enhancing price transparency and discouraging price discrimination. This should contribute to reducing market segmentation and fostering competition. Such eﬀects are likely to be displayed more fully following the physical introduction of the euro in January 2002. Some sources of cross-country uncertainties/risks will decline or disappear. A common currency among partner countries is seen as ‘a much more serious and durable commitment’ (McCallum, 1995). A new eﬀect is that one single currency is more eﬃcient than multiple currencies in performing the roles of medium of exchange by eliminating transaction costs, and unit of...
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