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The Gradual Transformation of Continental European Labor Markets: France and Germany Compared

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  • Eichhorst, Werner

    (IZA)

Abstract

Germany and France are both Continental European welfare states with severe labor market problems such as low employment and high and persistent unemployment which can be explained by labor market institutions that inhibit labor market adaptability. This paper analyzes recent reforms in core areas such as active and passive labor market policies, employment protection and the funding of social policies through taxes and social security contributions in both countries. It shows if and to what extent more favourable conditions for employment growth could be created. The paper identifies the limits of partial reforms in terms of the creation of more efficient labor market institutions although these reforms are highly plausible in politico-economic terms. However, the cumulative effect of sequences of marginal changes leads to a gradual medium-term transformation of both Continental European labor markets.

Suggested Citation

  • Eichhorst, Werner, 2007. "The Gradual Transformation of Continental European Labor Markets: France and Germany Compared," IZA Discussion Papers 2675, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2675
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    2. Simonida Vucenov & Jelena Duran, 2012. "Institutional Prerequisites of Employment Policy andFunctioning of Labour Market," Book Chapters, in: João Sousa Andrade & Marta C. N. Simões & Ivan Stosic & Dejan Eric & Hasan Hanic (ed.), Managing Structural Changes - Trends and Requirements, edition 1, volume 1, chapter 24, pages 444-459, Institute of Economic Sciences.
    3. Patrick Lunz, 2013. "What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets?," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 5, London School of Economics / European Institute.
    4. Patrick Lunz, 2013. "What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets?," LEQS – LSE 'Europe in Question' Discussion Paper Series 65, European Institute, LSE.
    5. Farkas, Beáta, 2011. "A közép-kelet-európai piacgazdaságok fejlődési lehetőségei az Európai Unióban [The development opportunities for the Central-East European market economies within the European Union]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 412-429.
    6. Schwander, Hanna, 2015. "Labor market risks in times of welfare state transformation," TranState Working Papers 192, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    7. Rocio Bonet & Cristina Cruz & Daniel Fernández Kranz & Rachida Justo, 2013. "Temporary Contracts and Work—Family Balance in a Dual Labor Market," ILR Review, Cornell University, ILR School, vol. 66(1), pages 55-87, January.
    8. Fernández-Kranz Daniel & Aitor Lacuesta & Núria Rodríguez-Planas, 2013. "The Motherhood Earnings Dip: Evidence from Administrative Records," Journal of Human Resources, University of Wisconsin Press, vol. 48(1), pages 169-197.
    9. Wolfgang Ochel, 2008. "The Political Economy of Two-tier Reforms of Employment Protection in Europe," CESifo Working Paper Series 2461, CESifo.

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    More about this item

    Keywords

    Germany; France; labor market institutions; institutional changes; political economy;
    All these keywords.

    JEL classification:

    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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