Labour markets and monetary union: A strategic analysis

Alex Cukierman, Francesco Lippi

Research output: Contribution to journalArticlepeer-review


This paper shows that the effects of a monetary union depend on several labour market features. In particular, the switch from national monetary policies to a common monetary policy usually affects both inflation and unemployment, even when all structural parameters of the economy and of unions' and policymakers' preferences remain the same. The benchmark case of a monetary union between identical countries suggests that the switch to a monetary union is likely to make labour unions more aggressive, increasing unemployment. Qualifications to this result are provided under alternative institutional scenarios, like cross-country asymmetries, (pre-union) ERM membership and wage leadership.

Original languageEnglish
Pages (from-to)541-565
Number of pages25
JournalEconomic Journal
Issue number473
StatePublished - 2001


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