Real versus Nominal Convergence: National Labour Markets and the European Integration Process

ABSTRACT: This paper investigates the role of national labour market characteristics for the chances of successful transition to EMU in Europe as well as for its viability The conclusions are rather pessimistic Although overlooked by the Maastricht Treaty the need for real convergence (I e convergence of real macroeconomic variables like unemployment) is emphasized as a major condition for success However current labour market characteristics in the EC make it quite unlikely that this condition will be fulfilled We show that the implementation of the Maastricht programme might turn into an obstacle to monetary unification