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Wage inflation and labour unions in EMU

Johnston, Alice and Hancké, Bob ORCID: 0000-0002-3334-231X (2009) Wage inflation and labour unions in EMU. Journal of European Public Policy, 16 (4). pp. 601-622. ISSN 1350-1763

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Identification Number: 10.1080/13501760902872742


This paper examines different levels of wage moderation in EMU member states since the introduction of the euro. Most arguments examining wage restraint have done so relying on the assumptions that relations between EMU member states are symmetric and that wage-setting systems are similar across sectors within one country. We introduce one innovation to these approaches and develop a second existing one. The paper adopts a dual-sector approach, where exposed sector unions are still tied to a competitiveness constraint on wages, while sheltered sector unions neither face a hard monetary constraint imposed by the central bank nor are subject to a competitive one. Wage moderation is higher in countries with wage-bargaining institutions which tie wage-setters in the sheltered sector to the exposed sector through a co-ordination mechanism. The second innovation is that of asymmetries between Germany and other EMU member states.

Item Type: Article
Official URL:
Additional Information: © 2009 Taylor & Francis
Divisions: European Institute
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JN Political institutions (Europe)
Date Deposited: 17 Aug 2009 14:17
Last Modified: 20 Oct 2021 00:43

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