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Policy Influences on Unemployment: the European Experience

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  • Christopher A. Pissarides

Abstract

This paper considers the implications of four kinds of labour market policies for the 1980s rise in European unemployment: unemployment compensation, active labour market policies, employment protection legislation and taxation. It finds evidence that all have played a role in the determination of unemployment and discusses the mechanisms involved, the extent of the influence of each and the lessons learned from this experience. One of the main findings is that there is a trade‐off between wage inequality and unemployment. Policy has played a role in determining how a country responded to the negative macroeconomic shocks of the 1980s but policy alone cannot explain the full rise in European unemployment and North American wage inequality.

Suggested Citation

  • Christopher A. Pissarides, 1999. "Policy Influences on Unemployment: the European Experience," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 389-418, September.
    • Handle: RePEc:bla:scotjp:v:46:y:1999:i:4:p:389-418
    DOI: 10.1111/1467-9485.00140
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    Cited by:

    1. Mr. Domenico Fanizza & Miss Taline Koranchelian, 2005. "How Does Employment Protection Legislation Affect Unemployment in Tunisia? A Search Equilibrium Approach," IMF Working Papers 2005/092, International Monetary Fund.
    2. International Monetary Fund, 2004. "Tunisia: Selected Issues," IMF Staff Country Reports 2004/360, International Monetary Fund.
    3. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CESifo Working Paper Series 981, CESifo.
    4. Erkki Koskela & Rune Stenbacka, 2001. "Equilibrium Unemployment with Credit and Labour Market Imperfections," CESifo Working Paper Series 419, CESifo.
    5. Banker, Rajiv D. & Byzalov, Dmitri & Chen, Lei (Tony), 2013. "Employment protection legislation, adjustment costs and cross-country differences in cost behavior," Journal of Accounting and Economics, Elsevier, vol. 55(1), pages 111-127.
    6. Diana Filipa Cruz Costa & Samuel Cruz Alves Pereira & Elísio Fernando Moreira Brandão, 2018. "Cost Behaviour – An Empirical Investigation For Euro Area Countries," FEP Working Papers 609, Universidade do Porto, Faculdade de Economia do Porto.
    7. Fuxi Wang & Bernard Gan & Yanyuan Cheng & Lin Peng & Jiaojiao Feng & Liquian Yang & Yiheng Xi, 2019. "China’s Employment Contract Law: Does it deliver employment security?," The Economic and Labour Relations Review, , vol. 30(1), pages 99-119, March.
    8. Robert Shimer, 2002. "The Research Agenda: Labor Market Frictions and Business Cycles," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 4(1), November.
    9. Norbert Berthold, 2000. "Abbau von Inflexibilitäten auf dem Arbeitsmarkt – Ist die Wirtschaftspolitik auf dem richtigen Weg?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 1(2), pages 229-250, May.
    10. Berthold Norbert, 2000. "Mehr Beschäftigung, weniger Arbeitslosigkeit: Setzt sich das ökonomische Gesetz gegen (verbands-)politische Macht durch?," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 51(1), pages 231-260, January.

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