SFB 303 Discussion Paper No. A - 539

Author: Hefeker, Carsten, and Hans Peter Grüner
Title: Militant Labor and Inflation Aversion: The Impact of EMU on Labor Union Interaction
Abstract: This paper explores how European Monetary Union will change the wage setting behavior of national labor unions. We derive the impact of national inflation aversion and labor militancy on the performance of national labor markets under different monetary arrangements. A common central bank raises inflation and unemployment if it acts as conservative as national central banks. However, unemployment falls in countries that currently tie their monetary policy to the Bundesbank. We further discuss the composition of EMU and the influence of national labor market legislation.
Keywords: European Monetary Union, Unemployment, Labor Unions
JEL-Classification-Number: E24, F02, F33
Creation-Date: November 1996
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