Close Encounters with the Non-Euro Effect: Structural reforms, Economic Integration and Sectoral Reallocation

Abstract

This paper addresses two questions. Does European integration foster structural reforms? Do the effects of these reforms vary across sectors? In line with previous studies, but using a larger sample of countries, longer time windows and more granular reform measures, we find the euro triggered reforms in product but not in labour markets. In contrast to previous studies, however, we find that (1) the effects of the euro on structural reforms are not larger than those of the Single Market and (2) the well-known difficulties in establishing robust effects of reforms seem driven more by country than by sector heterogeneity.