DP7251 Inequality, Integration, and Policy: Issues and evidence from EMU

Author(s): Giuseppe Bertola
Publication Date: April 2009
Keyword(s): Policy competition, Social policy
JEL(s): E0
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7251

Economic integration fosters production efficiency by enhancing market competition, and makes it difficult for National governments to conduct independent fiscal policies and to enforce income redistribution schemes. Controlling for country-level income variation, available data suggest that Europe?s Economic and Monetary Union (EMU) was associated with a small but significant increase in disposable income inequality, reflecting less generous social policies.