EMU and Labour Market Policy: Tensions and Solutions

Summary:

Reforms observed in EMU do not conform to commonly expressed views that international economic integration comes with labour market deregulation, and that both are beneficial. This essay examines the country-specific policy reforms evidence generated by inception of Economic and Monetary Union and by its disruption during the Great Recession and the Eurozone crisis, outlines non-technically how a distributional perspective can explain key features of those experiences, and discusses how these empirical observations and theoretical insights may bear on the sources and consequences of more general tensions between Europe’s policymaking framework and market integration process.

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