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Authors Cook, David View this author's profile
Issue Date 2011
Source The review of economics and statistics , v. 93, (4), November 2011, p. 1440-1452
Summary This paper reports evidence that OECD economies adopting fixed exchange rates in the process of forming the European currency union experienced declines in labor share of income at the industry level. This occurs most sharply among countries that experienced the biggest changes in their exchange rate policy. An implication of New Keynesian sticky price theory is that monetary policy has a first-order impact on labor share through the interaction of business cycle uncertainty and the choice of optimal markups. However, there is also evidence that goods market integration encouraged by the euro had a negative impact on the bargaining position of labor.
ISSN 0034-6535
Language English
Format Article
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