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From Convergence to CrisisLabor Markets and the Instability of the Euro$
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Alison Johnston

Print publication date: 2016

Print ISBN-13: 9781501702655

Published to Cornell Scholarship Online: January 2017

DOI: 10.7591/cornell/9781501702655.001.0001

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National Central Banks and Inflation Convergence

National Central Banks and Inflation Convergence

Danish and Dutch Corporatism Inside and Outside of Monetary Union

Chapter:
(p.78) 4 National Central Banks and Inflation Convergence
Source:
From Convergence to Crisis
Author(s):

Alison Johnston

Publisher:
Cornell University Press
DOI:10.7591/cornell/9781501702655.003.0004

This chapter examines the link between national level, inflation-averse central banks and European Economic and Monetary Union (EMU) regime change, on the one hand, and sheltered sector wage suppression, on the other, by comparing the pre- and post-EMU experiences of Denmark and the Netherlands. Both Denmark and the Netherlands share traditions of corporatism that influence pay and working conditions for the majority of the labor force. Sector-wide bargaining predominates in both countries, with company bargaining also enforcing guidelines established at the sectoral level. They also experienced institutional and economic developments in the 1990s and 2000s that were conducive to sheltered sector wage inflation. This chapter first considers Dutch wage-setting under a hard currency commitment and how Danish wage-setting responded to state-imposed austerity before discussing wage moderation in the private and public sector in both countries throughout the 1990s. It shows that inflationary public sector wage settlements arose only in the Netherlands after EMU entry was secured.

Keywords:   central banks, European Economic and Monetary Union, sheltered sector, wage suppression, Denmark, Netherlands, corporatism, wage inflation, wage-setting, wage moderation

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