Unemployment and Labor Market Institutions

David R. Howell

in Fighting Unemployment

Published in print February 2005 | ISBN: 9780195165845
Published online July 2005 | e-ISBN: 9780199835515 | DOI:
 Unemployment and Labor Market Institutions

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This concluding chapter makes use of evidence from the earlier chapters in this volume, from other recent country case studies, and from additional data on selected country “success stories” and “failures” to sum up the empirical case against the orthodox view—that labor market rigidities explain high unemployment and that free market reforms are required for good employment performance. Some dimensions of the French, Italian, Belgian, and Austrian experiences not covered in the earlier chapters are briefly discussed. The country case study evidence suggests an alternative to the orthodox rigidity account: employment performance across affluent countries appears to be related to the ability to effectively coordinate macroeconomic and social policies with the wage bargaining system, and that this in turn seems to require both strong employer and union associations and a relatively stable and consensual political environment. In any case, it is evident that fundamentally different labor market models are compatible with low unemployment, ranging from the free market “American Model” to the much more regulated and coordinated Scandinavian systems. The policy discourse should move beyond free market orthodoxy.

Keywords: flexibility; welfare state; labor market; regulation; deregulation; unemployment; employment; labor market institutions; unemployment benefits; wages; wage inequality; labor costs; collective bargaining

Chapter.  13818 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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