Differences in wage determination in the Eurozone: A challenge to the resilience of the common currency

Different developments in wages and unit labor costs across countries can reduce the synchronization of business cycles within a currency area therefore be potential source asymmetric shocks and/or response to common shock. In this paper, we use novel econometric methods identify differences similarities wage determination Eurozone countries. Results show that have different determinants euro countries, among which two relatively distinct groups identified. particular, Germany, Austria, Belgium, Luxembourg, Netherlands Finland behave more similarly, are less sticky respond macroeconomic conditions than those group composed Italy, Spain, Portugal, France Ireland. Moreover, equilibrium has been affected by structural change contemporaneous international financial crisis. Finally, reforms since crisis contributed make market structures similar, improve resilience Eurozone, but job is not completed yet.