The creation of a monetary union alters the incentives private agents face when bargaining their wage contracts. The model presented here introduces country specific real shocks to the Gray (1976) optimal wage indexation framework for a continuum of unions. It is assumed that the unions engage...

Standard models of the new trade and location theories usually assume full employment and are thus ill-equipped to study spatial unemployment differences, which in reality are more pronounced that income disparities Regional labour market theories like the ´wage curve´-approach on the other...