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Labor market policy in a global economy

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  • Berthold, Norbert
  • Fehn, Rainer

Abstract

This paper deals with the much discussed question how to design labor market policy in a global economy. The starting point of the paper is the fact that national unemployment rates differ greatly, which alludes to country-specific institutional factors being the most plausible culprit for rising and lasting unemployment. Hence, identifying institutional setups which promote employment growth is a prerequisite for successfully fighting unemployment. To this end the paper is divided into three main sections. The first section provides a non-technical synopsis of the main causes of persistently high unemployment which can in particular be observed in continental Europe. Special emphasis is put on the question how the ongoing process of globalization of goods and factor markets relates to the rise of unemployment. The by now standard explanation of rising unemployment is a change in the structure of labor demand towards higher skill requirements, be they caused by growing inter-industry trade or skill-biased technical progress, which conflicts with rigid wage structures in continental Europe. However, a number of important shortcomings of this approach are pointed out, which show that this is hardly an encompassing explanation...

Suggested Citation

  • Berthold, Norbert & Fehn, Rainer, 1999. "Labor market policy in a global economy," Discussion Paper Series 26, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    • Handle: RePEc:zbw:wuewwb:26
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    References listed on IDEAS

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    1. Saint-Paul, Gilles, 1998. "A framework for analyzing the political support for active labor market policy," Journal of Public Economics, Elsevier, vol. 67(2), pages 151-165, February.
    2. Jose Vinals & Juan F. Jimeno, "undated". "Monetary union and european unemployment," Working Papers 96-22, FEDEA.
    3. Mr. Karl F Habermeier & Mr. Robert J. Corker & Mr. Robert A Feldman & Ms. Tessa Van der Willigen & Mr. H. Vittas, 1995. "United Germany: The First Five Years: Performance and Policy Issues," IMF Occasional Papers 1995/007, International Monetary Fund.
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    1. Fehn, Rainer, 1999. "Globalisierung und unvollkommene Kapitalmärkte: Verschärft die Knappheit international anerkannter Sicherheiten Länderkrisen?," Discussion Paper Series 29, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    2. 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.
    3. Berthold, Norbert & Fehn, Rainer & Thode, Eric, 1999. "Rigide Arbeitsmärkte und ungleiche Einkommensverteilung: Ein unlösbares Dilemma?," Discussion Paper Series 31, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

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