DP10088 Labor policies and capital mobility in theory and in EMU
| Author(s): | Giuseppe Bertola |
| Publication Date: | August 2014 |
| Keyword(s): | policy competition, public choice |
| JEL(s): | F36, J08 |
| Programme Areas: | International Macroeconomics, Labour Economics |
| Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=10088 |
"Race-to-the-bottom" deregulation is to be expected when markets operate across the borders of countries that independently choose and enforce labor policies. Less obviously, in pre-crisis EMU reforms of labor market policies were uneven and related to international imbalances. That pattern is readily explained by this paper's model of financial integration between differently capital-abundant countries, within which labor policies benefit individuals with wealth/labor income ratios different from country's aggregate.