Der Euro als Jobmaschine? Zu den Auswirkungen des Euro auf den deutschen Arbeitsmarkt
AbstractThis paper analyzes the potential advantages and disadvantages of the introduction of the common European currency for the German labor market. First, experiences of the German currency union of 1990 cannot be transferred to the European case. Second, the loss of the instrument of nominal exchange rates per se should not be exaggerated, since, empirically, volatility among the European currencies is relatively low already and is mostly due to speculative capital flows which destroyed jobs in the past. Decreased transaction costs might have a positive effect on employment. On the other hand, the Euro will not create additional pressure on national market structres to adapt to increased competition. This is done by the persistent relevance of real exchange rates and the European Single Market. While higher mobility of labor might not be a desirable substitute for the buffer function of national monetary policy, there will be an increased need for wage flexibility in order to avoid negative impacts of asymmetric shocks. Increased intra-European transfers are no alternative due to their negative incentives for economic reform. Excessive wages, however, were not alimentated by the German Bundesbank either, and wage setting cannot be solely held responsible for high unemployment in situations of recession and mismatch in the labor market. Assessing these aspects of EMU, one should not expect massive positive employment effects of the Euro.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 9.
Length: 33 pages
Date of creation: Jun 1998
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Find related papers by JEL classification:
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
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- Puhani, Patrick A., 1999. "Labour Mobility - An Adjustment Mechanism in Euroland?," IZA Discussion Papers 34, Institute for the Study of Labor (IZA).
- Patrick A. Puhani, 2001.
"Labour Mobility: An Adjustment Mechanism in Euroland? Empirical Evidence for Western Germany, France and Italy,"
German Economic Review,
Verein für Socialpolitik, vol. 2(2), pages 127-140, 05.
- Puhani, Patrick A., 1999. "Labour mobility - an adjustment mechanism in Euroland? Empirical evidence for Western Germany, France and Italy," ZEW Discussion Papers 99-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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