Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-27T08:22:11.736Z Has data issue: false hasContentIssue false
  • English
  • Français

Is the Euro Working? The Euro and European Labour Markets

Published online by Cambridge University Press:  01 July 2004

STEPHEN J. SILVIA
STEPHEN J. SILVIA
Affiliation:
International Studies, American University, Washington DC
Get access Rights & Permissions [Opens in a new window]

Abstract

Now that time has passed since the introduction of the euro as a commercial currency, it is possible to assess many arguments made in the abstract during the 1990s about European monetary union. This article shows that the euro zone still falls short as an optimal currency area in most respects. In particular, it undertakes an empirical analysis of the labour market and finds no progress toward flexibility or integration. These results challenge assertions of ‘endogenous currency area’ proponents that the euro area would become optimal ‘after the fact’, and that labour markets would serve as the principal avenue of adjustment. Instead, a ‘rigidity trap’ has developed in the euro area, consisting of relatively tight monetary policy, forced fiscal consolidation, and a risk of deflation in some economies. These conditions have compounded the difficulties of structural adjustment in European labour markets.

Type
Research Article
Information
Journal of Public Policy , Volume 24 , Issue 2 , August 2004 , pp. 147 - 168
Copyright
© 2004 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The research and first drafts of this article were produced as part of the author’s DaimlerChrysler Senior Fellowship at the American Institute for Contemporary German Studies, Washington, D.C. The author would also like to thank Jeffery Anderson, Xavier Debrun, Cathleen Fisher, Véronique Genre, Randy Henning, Gerd Jan, Jackson Janes, Geoff Kenny, Francesco Paolo Mongelli, Ilonka Oszwald, Jennifer Paxton, Richard Rose, Caleb Rossiter and the anonymous reviewers for their comments and assistance.