The discussion was based on two presentations: EMU and the Labour Market - A Speculative Assessment , by Karl-Heinz Paque and Otto von Guericke; Tax Competition in the European Monetary Union: Present and Prospects, by Jacques LE CACHEUX . EMU and the Labour Market - A Speculative Assessment The transition from the European Monetary System (EMS) to the European Monetary Union (EMU) is a big historical event. For economists, big historical events are extremely hard to assess. This is so for two reasons: First, big historical events are rare, and rare events have few if any precedents that could be used as empirical standards of comparison to make reasonably accurate predictions about the likely effects and consequences of the historical change under consideration. Second, big historical events are revolutionary in the sense that they may change many fundamentals of life so that it becomes difficult to set up a counterfactual scenario which can serve as a reasonable yardstick for history's 'normal' path. Hence much of what an economist can say about big historical events is a theoretically based and empirically enriched speculation. This is how this (non-technical) paper should be understood. Tax competition arises as soon as economic and financial openness is sufficient for tax bases to migrate across jurisdictional boundaries. Whereas the completion of the Single European Market had raised fears that it may lead to enhanced tax competition amongst national governments of member states, the evidence suggests that it has been limited to some aspects of national taxation, such as taxes on income and capital gains from individuals' financial asset holdings. However, with the full monetary integration in the European Union, it is likely that competition will strengthen, which may lead to more severe tax competition, in particular on business taxation in order to attract firms or provide existing ones with a competitive advantage.
Labour market; Monetary integration; Tax competition; EMU
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