EUROPEAN-MONETARY-UNION AND LABOR-MARKETS - WHAT TO EXPECT

European Monetary Union (EMU) will change fundamentally the economic and financial framework of the European Union and will thus inevitably have implications for the key problem of unemployment. The theory of optimum currency areas, trade union models, the Calmfors-Driffill model on the level of wage bargaining and Krugman's new economic geography are applied to the question of the likely labour market effects of EMU. Since EMU will establish a new framework, however, existing approaches can provide only limited evidence for potential employment effects. Thus, he argues for a focus on policies to achieve the desired employment effects.