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In this paper, the rising divergence in sectoral wage moderation within European Monetary Union (EMU) member states since the introduction of the Euro is examined. During the 1980s and 1990s, wage restraint cycles between exposed, manufacturing sectors, and sheltered, private services sectors within EMU candidate-countries were highly synchronous, and differences in wage inflation between sectors within countries was low. After 1996, significant divergence in sectoral wage inflation emerged, and synchronicity of wage restraint cycles between sectors collapsed after 1999.
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