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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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Monetary Regimes, Wage Bargaining, and the Current Account Crisis in the EMU South

Monetary Regimes, Wage Bargaining, and the Current Account Crisis in the EMU South

Empirical Evidence

(p.54) 3 Monetary Regimes, Wage Bargaining, and the Current Account Crisis in the EMU South
From Convergence to Crisis

Alison Johnston

Cornell University Press

This chapter presents empirical evidence for the two institutional linkages: that the European Economic and Monetary Union (EMU) led to a bifurcation in sectoral wage developments within its member states and that, despite this bifurcation, employers in northern EMU economies utilized corporatist bargaining arrangements to persistently undercut the trade performance of their southern EMU neighbors after 1999. Using a panel analysis of seventeen OECD countries from 1980 to 2007, the chapter tests the correlation between inflation-averse central banks at the national level and the Maastricht conditionality, on the one hand, and sectoral wage inflation and wage growth, on the other. It also examines the link between sheltered sector wage suppression and export success and shows that export-favoring wage governance institutions helped maintain competitiveness for countries that possessed them; the effect of these institutions on export growth was particularly magnified under monetary union.

Keywords:   wage inflation, European Economic and Monetary Union, corporatist bargaining, central banks, Maastricht conditionality, wage growth, sheltered sector, wage suppression, export growth, monetary union

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