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Relative Wages in Monetary Union and Floating

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Author Info
Vartiainen, Juhana () (Trade Union Institute for Economic Research)
Abstract

We analyse a small open economy with a tradable and a sheltered sector. If the unions that operate in each sector coordinate their wage demands sectorwise, the choice of monetary regime - floating cum inflation target vs EMU - may affect the relative wages and prices of the economy. We show that EMU results in lower prices for tradable goods and lower real wages in the traded sector while opposite results hold for sheltered sector prices and wages. Thus, if large unions behave strategically, the choice of monetary regime has far-reaching structural implications.

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Publisher Info
Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 155.

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Length: 20 pages
Date of creation: 04 Nov 1999
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Publication status: Published in Scandinavian Journal of Economics, 2002, pages 277-287.
Handle: RePEc:hhs:fiefwp:0155

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Related research
Keywords: Trade unions Wage bargaining EMU Monetary policy

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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References listed on IDEAS
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.:
  1. Rama, Martin, 1994. "Bargaining structure and economic performance in the open economy," European Economic Review, Elsevier, vol. 38(2), pages 403-415, February. [Downloadable!] (restricted)
  2. Holden,S., 1999. "Wage setting under different monetary regimes," Memorandum 12/1999, Oslo University, Department of Economics. [Downloadable!]
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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.)

  1. Steinar Holden, 2002. "Wage Setting Under Different Monetary Regimes," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  2. Holden,S., 2000. "Monetary regime and the co-ordination of wage setting," Memorandum 01/2000, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
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