Does Joining the European Monetary Union Improve Labor Productivity? A Synthetic Control Approach
Document Type
Article
Publication Date
6-2023
Publisher
Springer
Source Publication
Journal of Productivity Analysis
Source ISSN
0895-562X
Original Item ID
DOI: 10.1007/s11123-023-00668-1
Abstract
We adopt the innovative synthetic control method (SCM) to study the causal effect of joining the European Monetary Union (EMU) on member countries’ labor productivity. Comparing labor productivity between members and their synthetic counterparts, we find that Belgium, France, Germany, Ireland, Italy, and the Netherlands experienced significant labor productivity gains from the eurozone membership. Our results are robust to a series of sensitivity checks. We also observe similar effects of EMU on members’ total factor productivity (TFP). Furthermore, we explore potential channels through which a monetary union can influence members’ labor productivity. Our results show that business cycle synchronization with other members and similar labor market institutions to other members contribute to an EMU country’s labor productivity gains.
Recommended Citation
Zhuang, Hong; Wang, Miao Grace; Ersoy, Imre; and Eren, Mesut, "Does Joining the European Monetary Union Improve Labor Productivity? A Synthetic Control Approach" (2023). Economics Faculty Research and Publications. 646.
https://epublications.marquette.edu/econ_fac/646
Comments
Journal of Productivity Analysis, Vol. 59, No. 3 (June 2023): 287-306. DOI.