This paper argues that labour mobility shapes shock propagation in currency unions through its interaction with regional governments’ fiscal space, a mechanism beyond the standard Mundellian view. By developing a New Keynesian open-economy model of migration, I show analytically that when governments face binding debt limits, labour mobility exerts two opposing forces on fiscal space: emigration expands fiscal capacity through spillover effects that raise per-capita fiscal contributions, but contracts it through increased per-capita debt burden. The dominant effect dictates whether labour mobility enables a stronger expansionary fiscal response to negative idiosyncratic shocks, reinforcing its stabilising role; or forces governments into pro-cyclical fiscal consolidations, amplifying the original shock – the more probable equilibrium when debt is high. Using LinkedIn data to construct a novel panel of monthly intra-EU migration flows, I estimate an SVAR and local projection model to uncover that the fiscal-mobility amplification mechanism was prevalent during high-debt regimes in the EU between 2000 and 2019.

This paper empirically tests whether minimum wages may have positive employment effects when diverging from a perfect competition framework. I use administrative data from 1986 to 2013 to segment Portugal into several local labour markets and construct Herfindahl–Hirschman Indices to measure concentration levels in each market. I find that increased minimum wage exposure has differential employment effects depending on labour market concentration — estimates indicate employment responds negatively in highly competitive markets and positively in highly concentrated ones. These results are robust to the usage of instrumental variables and to different definitions of local labour markets, although the persistence of these effects varies across specifications. Labour markets are highly heterogeneous in their concentration level, which can help reconcile the conflicting results in the minimum wage literature and provide new policy insights.

• July 202316th Annual Meeting of the Portuguese Economic Journal, Braga