THE ERM AND STRUCTURAL-CHANGE IN EUROPEAN LABOR-MARKETS - A STUDY OF 10 COUNTRIES

This paper tests for structural changes in European labour markets and attempts to associate them with the evolution of the ERM as well as with political, and institutional developments, The results indicate that diverging sacrifice ratios, rather than tax wedge and productivity effects may be the strongest impediment to labour market convergence in the transition from the ERM to full economic and monetary union. The empirical work indicates that the ERM may have provided some pressure towards more symmetric responses to shocks, but the changes have not been great,