In a recent document OECD has suggested that the monetary union could bring about a convergence of wages'Â’ level in Europe. Such a convergence could be rather harmful for some country's competitiveness and for the conduct of monetary policy, unless it is fully matched by a consistent equalisation in the levels of labour productivity. This paper contributes to this debate by proving an evaluation of the actual magnitude of the dispersion of manufacturing wages across of Europe. Results suggest that from the early seventies labour costs in European manufacturing sectors have been converging; thus in the 1990 actual dispersion of labour costs is rather low.The equalisation of wages is entirely due to the reduction of the between countries component of wage dispersion that has been driven by the levelling off of the labour productivity among European countries. The sectoral component of dispersion did not decline because inter industry wage differentials are stable over time and similar across countries, as they reflect aggregations of workers with different level of skill. However EMU could play a role in reducing wages dispersion across Europe by fostering a change in the national wage bargaining system, leading to more egalitarian paradigma, and by reducing firmsÂ’ rents on product markets by increasing competition.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.