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N° 180 |
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| June 1999 |
| Wage Flexibility and EMU |
Loïc Cadiou
Stéphanie Guichard
Mathilde Maurel |
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| European labour markets have been shaped
by the social histories each of member country, and still display great heterogeneity
today. No European initiative has yet opened the way to any real harmonisation
in this field. But this is now a burning issue: does the diverse functioning of
European labour markets not risk being a handicap in tackling the cyclical fluctuations
within EMU? The answer given to this question here is negative. Though wage flexibility
varies across countries, it is not sufficient to lead to national reactions that
are strongly asymmetric. It does not therefore constitute a problem for common
policies. Nor is wage flexibility a remedy at the national level. Indeed, such
flexibility in Europe is insufficient to compensate for the loss of the exchange
rate instrument in the face of asymmetric shocks. |
Abstract |
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