Exchange-Rate Volatility as Employment Protection
AbstractTwo issues; the liberalisation of labour markets and monetary unification, have taken centre stage in policy debates on the future of the European Union. We show that both have the effect of raising capital mobility as well as labour-market flexibility. The reduction of exchange-rate fluctuations reduces the cost of both entering a market - by setting up companies and hiring new employees - as well as exiting by dismantling existing capital structures and firing employees. Thus the adoption of a single currency has effects very similar to the removal of employment-protection legislation and other direct restrictions on hiring and firing. The distinction between structural reforms in the labour market and monetary reforms may for this reason not be very helpful in finding the keys to higher employment growth in Europe. However, exchange-rate volatility is more harmful for the entry of new firms, particularly promising, high-risk ventures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 46.
Date of creation: 29 Aug 2002
Date of revision:
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/society/annualconf.asp
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-07-08 (All new papers)
- NEP-FIN-2002-07-08 (Finance)
- NEP-IFN-2002-07-08 (International Finance)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.