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Demand- and Supply-Side Policies and Unemployment: Policy Implications of the Insider-Outsider Approach

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  • Lindbeck, Assar
  • Snower, Dennis J.

Abstract

The paper analyzes a variety of government policies that can stimulate employment when unemployment is generated through the conflicting of interest between insiders and outsiders. It also provides guidelines for identifying policies that may be ineffective. We show how supply side policies can stimulate employment by raising worker productivity or reducing labor costs. Our analysis indicates that when wages and prices are flexible, product demand policies have no significant effect on employment unless these policies stimulate labor productivity, the entry of firms, capital utilization or investment.

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File URL: http://www.cepr.org/pubs/dps/DP329.asp
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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 329.

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Date of creation: Aug 1989
Date of revision:
Handle: RePEc:cpr:ceprdp:329

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Related research

Keywords: Employment; Government Policy; Labour Productivity; Unions; Wages;

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Cited by:
  1. Aguiar, Alvaro & Ribeiro, Ana Paula, 2009. "Monetary policy and the transition costs of a labor market reform," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 547-560, December.
  2. Rebecca M. Blank, 1997. "No Easy Answers: Comparative Labor Market Problems in the United States versus Europe," Economics Working Paper Archive wp_188, Levy Economics Institute.
  3. Rebecca M. Blank & Richard B. Freeman, 1994. "Evaluating the Connection between Social Protection and Economic Flexibility," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 21-42 National Bureau of Economic Research, Inc.
  4. Fung, K. C. & Lin, Chelsea C. & Maechler, Andrea M., 2003. "European Economic Integration and the Effectiveness of Employment Policies," Santa Cruz Department of Economics, Working Paper Series qt0tp8k3c5, Department of Economics, UC Santa Cruz.
  5. Muysken,Joan & Zwick,Thomas, 1996. "A note on incentive wages with human capital formation," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  6. Tony Syme, 2000. "Public Policy and Unemployment in Interwar France: An Empirical Approach," Economics Series Working Papers 55, University of Oxford, Department of Economics.
  7. Kilponen, Juha, 1999. "Central Bank Independence and Wage Bargaining Structure - Empirical Evidence," Research Discussion Papers 9/1999, Bank of Finland.

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