Does Joining the European Monetary Union Improve Labor Productivity? A Synthetic Control Approach

Authors

Hong Zhuang, Indiana University South Bend
Miao Grace Wang, Marquette UniversityFollow
Imre Ersoy, Marmara University
Mesut Eren, Marmara University

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.

Comments

Accepted version. Journal of Productivity Analysis, Vol. 59, No. 3 (June 2023): 287-306. DOI. © 2023 Springer. Used with permission.

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