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Quantifying the Benefits of Labor Mobility in a Currency Union / Christopher L. House, Christian Proebsting, Linda L. Tesar.
- Format:
- Book
- Author/Creator:
- House, Christopher L.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25347.
- NBER working paper series no. w25347
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- Unemployment differentials are bigger in Europe than in the United States. Migration responds to unemployment differentials, though the response is smaller in Europe. Mundell (1961) argued that factor mobility is a precondition for a successful currency union. We use a multi-country DSGE model with cross-border migration and search frictions to quantify the benefits of increased labor mobility in Europe and compare this outcome to a case of fully flexible exchange rates. Labor mobility and flexible exchange rates both work to reduce unemployment and per capita GDP differentials across countries provided that monetary policy is sufficiently responsive to national output.
- Notes:
- Print version record
- December 2018.
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