EUROPEAN-MONETARY-UNION AND LABOR-MARKETS - WHAT TO EXPECT

European Monetary Union (EMU) will change fundamentally the economic a nd financial framework of the European Union and will thus inevitably have implications for the key problem of unemployment. The theory of o ptimum currency areas, trade union models, the Calmfors-Driffill model on the level of wage bargaining and Krugman's new economic geography are applied to the question of the likely labour market effects of EMU . Since EMU will establish a new framework, however, existing approach es can provide only limited evidence for potential employment effects. Thus, he argues for a focus on policies to achieve the desired employ ment effects.