Working Paper: CEPR ID: DP10088
Authors: Giuseppe Bertola
Abstract: "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.
Keywords: Labor policies; Capital mobility; EMU; Deregulation; International competition
JEL Codes: F36; J08
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor market deregulation (J48) | capital outflows (F32) |
| capital mobility (F20) | labor market deregulation (J48) |
| capital-labor ratio of politically decisive individuals (D33) | labor market deregulation (J48) |
| labor policies (J88) | employment and productivity (O49) |
| capital mobility (F20) | policy reforms (E69) |