Map of Couladere on In fact, the Organization for Economic Cooperation and Development (1986) and the European Commission (1990) found that labor mobility among EMU members is from two to three times lower than among U.S. regions because of language barriers, inflexible housing markets, and labor markets that remain regulated. In addition to much greater regional and occupational labor mobility in the United States there is a great deal of federal fiscal redistribution in favor of the adversely affected region. In the euro area, on the other hand, fiscal redistribution cannot be of much help because the EMU budget is only about 1 percent of the EMU’s GDP, and more than half of it is devoted to its Common Agricultural Policy. Furthermore, real wages are also somewhat more flexible downward in the United States than in the euro area. None of these escape valves are available to an EMU member adversely affected by a negative asymmetric shock. Map of Couladere 2016.
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