Working Paper: CEPR ID: DP7251
Authors: Giuseppe Bertola
Abstract: 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.
Keywords: policy; competition; social policy
JEL Codes: E0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Economic and Monetary Union (EMU) (F36) | income inequality (D31) |
| EMU constraints on national governments' ability to implement independent fiscal policies (E62) | income redistribution efforts (H23) |
| rigid wages and prices due to inability to devalue currencies (E64) | income inequality (D31) |
| macroeconomic policy constraints under EMU (E61) | stabilization of economic activity (E63) |
| economic integration (F15) | income disparities (I24) |
| less generous social policies post-EMU (E69) | rising inequality (D31) |