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The Euro and Firm Restructuring

In: Europe and the Euro

  • Matteo Bugamelli
  • Fabiano Schivardi
  • Roberta Zizza

We test whether and how the adoption of the euro, narrowly defined as the end of competitive devaluations, has affected member states� productive structures, distinguishing between within and across sector reallocation. We find evidence that the euro has been accompanied by a reallocation of activity within rather than across sectors. Shit its adoption. productivity growth has been relatively stronger in country-sectors that once relied more on competitive devaluations to regain price competitiveness. This effect is robust to potential omitted-variable bias and correlated effects. Firm-level ev�idence from Italian manifacturing confirms that low-tech businesses, which arguably benefitted most from devaluations, have been restructuring more since the adoption of the euro. Restructuring has entailed a shift of business focus from production to up�stream and downstream activities, such as product design, advertising, marketing and distribution, and a corresponding reduction in the share of blue collar workers.

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This chapter was published in:
  • Alberto Alesina & Francesco Giavazzi, 2010. "Europe and the Euro," NBER Books, National Bureau of Economic Research, Inc, number ales08-1, December.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11663.
    Handle: RePEc:nbr:nberch:11663
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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