Five essays on performance and structural rigidities in European labour markets

This PhD thesis ? made up of five empirical essays ? looks into the role of structural rigidities in recent labour market performance in Europe from complementary angles and yields several results. First, the effect of institutions is complex owing to numerous interactions and their endogenous nature. Second, the level of labour utilisation in the EU15 is clearly lower than in the US, explaining two thirds of the EU15 gap in GDP per capita vis-à-vis the US. Labour underutilisation particularly affects the euro area but not the new member states. Third, robust evidence exists of a structural break in the employment behaviour in the late 1990s and early 2000s, which could be related to changes in the sectoral employment composition, the strong development of part-time jobs and lower labour tax rates. Fourth, part-time employment, used by firms as a ?flexible? tool, has a countercyclical pattern. In the longer run, rising female participation and changes in legislation on part-time jobs are key institutional or structural drivers. Five, the wage distribution in Europe is compressed across occupations and across levels of education, particularly in continental and southern EU15 countries, which would induce job losses for low-educated people.