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Labor Productivity Convergence Dynamics within the Euro Zone: A Theoretical and Empirical Examination

Yumuk, Veli LU (2011) NEKM02 20111
Department of Economics
Abstract (Swedish)
Twelve years ago, eleven European countries voluntarily abandoned their home currencies and joined the Euro. The founding fathers of the Euro believed that creation of the common currency would strengthen integration among the members and catalyze economic convergence progress within the common currency area. This study examines this issue in detail. I focus on labor productivity convergence and study it at sectoral level in order to figure out dynamics of different industries which are subject to different economic fundamentals. The sectors under study are electrical and optical machines (ELECOM), which denotes the IT industry in a specific country, goods production excluding electrical machinery, and market services excluding post and... (More)
Twelve years ago, eleven European countries voluntarily abandoned their home currencies and joined the Euro. The founding fathers of the Euro believed that creation of the common currency would strengthen integration among the members and catalyze economic convergence progress within the common currency area. This study examines this issue in detail. I focus on labor productivity convergence and study it at sectoral level in order to figure out dynamics of different industries which are subject to different economic fundamentals. The sectors under study are electrical and optical machines (ELECOM), which denotes the IT industry in a specific country, goods production excluding electrical machinery, and market services excluding post and telecommunication. The empirical results reveal the fact that in the Euro era, there is no labor productivity convergence within the first wave Euro zone countries in any of three sectoral categories. This result largely stems from two facts. First, the initial integration level among the Euro zone countries prior to joining the Euro was not developed enough to catalyze labor productivity convergence progress. On top of that, the creation of the Euro has not improved economic integration among the members to the extent estimated at its launch. (Less)
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author
Yumuk, Veli LU
supervisor
organization
course
NEKM02 20111
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Productivity Convergence, Neo-Classical Growth Theory, Economic Integration
language
English
id
1976317
date added to LUP
2011-06-16 15:12:36
date last changed
2011-06-16 15:12:36
@misc{1976317,
  abstract     = {Twelve years ago, eleven European countries voluntarily abandoned their home currencies and joined the Euro. The founding fathers of the Euro believed that creation of the common currency would strengthen integration among the members and catalyze economic convergence progress within the common currency area. This study examines this issue in detail. I focus on labor productivity convergence and study it at sectoral level in order to figure out dynamics of different industries which are subject to different economic fundamentals. The sectors under study are electrical and optical machines (ELECOM), which denotes the IT industry in a specific country, goods production excluding electrical machinery, and market services excluding post and telecommunication. The empirical results reveal the fact that in the Euro era, there is no labor productivity convergence within the first wave Euro zone countries in any of three sectoral categories. This result largely stems from two facts. First, the initial integration level among the Euro zone countries prior to joining the Euro was not developed enough to catalyze labor productivity convergence progress. On top of that, the creation of the Euro has not improved economic integration among the members to the extent estimated at its launch.},
  author       = {Yumuk, Veli},
  keyword      = {Productivity Convergence,Neo-Classical Growth Theory,Economic Integration},
  language     = {eng},
  note         = {Student Paper},
  title        = {Labor Productivity Convergence Dynamics within the Euro Zone: A Theoretical and Empirical Examination},
  year         = {2011},
}