The third stage of European Economic and Monetary Union (EMU) was implemented in January 1999 against the specter of persistently high unemployment in many of the participating countries. While the high European unemployment has received considerable attention, this new IMF staff study analyzes an equally important issue: the extent of regional unemployment disparities in certain countries. The paper focuses on large and persistent differences in regional unemployment rates within several European countries. The paper includes detailed case studies of two euro area countries where regional disparities in unemployment are striking- Italy and Spain. The studies emphasize that wages are unresponsive to local labor market conditions.

IMF, inflation, growth, financial policies, Ukraine, Estonia, markets, consumer price, exports, debt.

Central to this project is the analysis of regional labour markets in different European countries by research institutes across Eastern and Western Europe. The project parallels some main economic trends including the integration of market-based perspectives and power-based approaches. Next to these are the changes in institutional viewpoints, and both these developments bridge the gap between economic and sociological viewpoints on the labour market. The project develops an adapted institutional approach using these theoretical innovations.

In Youth Policies and Unemployment in Europe Paola Giannoni analyses the situation of the European youth regarding the changes in the job market dynamics and the strategies implemented by the EU for the social inclusion of young people.

The process of transition to a market economy and integration into the EU has strained the labour markets of central and eastern European countries, and these developments pose a number of challenges to their social policies. This volume presents the contributions given at an international labour conference held in Austria in June 2001 to investigate these issues. It provides the latest labour trends in EU accession countries and compares them to previous experiences of European integration. It reviews existing labour market policies and social protection mechanisms, and discusses alternative strategies for employment creation in the region.