DP7251 Inequality, Integration, and Policy: Issues and evidence from EMU

Author(s): Giuseppe Bertola

Publication Date: April 2009

Keyword(s): Policy competition , Social policy

JEL(s): E0

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP7251.asp.asp

Economic integration fosters production efficiency by enhancing market competition, and makes it difficult for National governments to conduct independent fiscal policies and to enforce income redistribution schemes. Controlling for country-level income variation, available data suggest that Europe’s Economic and Monetary Union (EMU) was associated with a small but significant increase in disposable income inequality, reflecting less generous social policies.