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European Monetary Integration and Aggregate Relative Deprivation: The Dull Side of the Shiny Euro

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  • Oded Stark
  • Julia Wlodarczyk

Abstract

type="main" xml:id="ecpo12059-abs-0001"> Drawing on the premise that the integration of economies revises people's social space and their comparators, we quantify social stress by aggregate relative deprivation, ARD; we calculate the effect of monetary mergers on ARD; and we document the validity of the superadditivity property of ARD for successive adoptions of a common currency by European countries. One feature of monetary unification, which replaces diverse currencies with a common currency, is that it brings about a change in the comparison environment, expanding the reference space of individuals in a given country to encompass individuals from the joining countries. Overall, calculations regarding six enlargements of the Economic and Monetary Union between 1999 and 2011 reveal an increase of ARD on six occasions when we hold incomes constant, and on five when we take into consideration changes in incomes. In addition, we observe an uneven distribution of the costs and benefits from monetary integration among the participating countries when these costs and benefits are measured in terms of ARD.

Suggested Citation

  • Oded Stark & Julia Wlodarczyk, 2015. "European Monetary Integration and Aggregate Relative Deprivation: The Dull Side of the Shiny Euro," Economics and Politics, Wiley Blackwell, vol. 27(2), pages 185-203, July.
    • Handle: RePEc:bla:ecopol:v:27:y:2015:i:2:p:185-203
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    File URL: http://hdl.handle.net/10.1111/ecpo.2015.27.issue-2
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    1. Oded Stark, 2010. "Looking at the Integration of Nations through the Lens of the Merger of Populations: Preliminary Superadditivity and Impossibility Results," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(IV), pages 661-675, December.
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    Cited by:

    1. Stark, Oded & Zawojska, Ewa & Kohler, Wilhelm & Szczygielski, Krzysztof, 2018. "An adverse social welfare effect of a doubly gainful trade," Journal of Development Economics, Elsevier, vol. 135(C), pages 77-84.
    2. Stark, Oded & Kosiorowski, Grzegorz, 2020. "An Adverse Social Welfare Effect of Quadruply Gainful Trade," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(3), pages 207-235, September.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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