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Flexibility and Growth

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Author Info
ANNAMARIA SIMONAZZI, PAOLA VILLA
Abstract

After two decades of theoretical discussion and application of labour policies aimed at flexibility, ever-spreading unemployment in Europe has compelled some official institutions to admit that the 'rigidity' of the labour market does not suffice to account for the different trends in employment displayed by Europe and the United States. In this paper, we focus on the role played by differentials in income growth. After briefly reviewing the explanations of European unemployment based on labour market rigidity and their respective weaknesses, we look at the relationship between growth and employment, concluding that there are grounds for maintaining that the causes of Europe's higher unemployment reside mainly in its lower rate of growth.We therefore investigate the reasons that may be responsible for a more stringent macroeconomic constraint on European growth.We conclude that if a lack of growth is at the root of European unemployment, then merely dismantling labour market institutions, and replacing them with a more flexible system of industrial relations, will not only fail to produce the expected results but may also have negative effects, in both the social and productive structure.

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Article provided by Taylor and Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 13 (1999)
Issue (Month): 3 (September)
Pages: 281-311
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Handle: RePEc:taf:irapec:v:13:y:1999:i:3:p:281-311

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  4. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June. [Downloadable!] (restricted)
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  5. Bruno Contini, Fabio M. Rapiti, 1999. "'Young In, Old Out' Revisited: New Patterns of Employment Replacement in the Italian Economy," International Review of Applied Economics, Taylor and Francis Journals, vol. 13(3), pages 395-415, September. [Downloadable!] (restricted)
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  16. Snower, Dennis J., 1994. "The Simple Economics of Benefit Transfers," CEPR Discussion Papers 1086, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  17. Richard B. Freeman, 1996. "Why Do So Many Young American Men Commit Crimes and What Might We Do About It?," NBER Working Papers 5451, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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