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Labour market institutions and economic performance

Layard, Richard and Nickell, Stephen (1998) Labour market institutions and economic performance. CEP Discussion Papers (CEPDP0407). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Barely a day goes by without some expert telling us how the continental European economies are about to disintegrate unless their labour markets become more flexible. Basically, we are told, Europe has the wrong sort of labour market institutions for the modern global economy. These outdated institutions both raise unemployment and lower growth rates. The truth of propositions such as these depends on which labour market institutions really are bad for unemployment and growth, and which are not. Our purpose in this paper is to set out what we know about this question. Our conclusions indicate that the labour market institutions on which policy should be focused are unions and social security systems. Encouraging product market competition is a key policy to eliminate the negative effects of unions. For social security the key policies are benefit reform linked to active labour market policies to move people from welfare to work. By comparison, time spent worrying about strict labour market regulations, employment protection and minimum wages is probably time largely wasted.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 1998 The Authors
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
J - Labor and Demographic Economics > J4 - Particular Labor Markets
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 12 Aug 2013 09:20
Last Modified: 23 May 2019 23:20
URI: http://eprints.lse.ac.uk/id/eprint/51638

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