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Demand- And Supply-Side Policies And Unemployment: Policy Implications Of The Insider-Outside Approach

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Author Info

  • LINDBECK, A.
  • SNOWER, D.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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Bibliographic Info

Paper provided by Stockholm - International Economic Studies in its series Papers with number 439.

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Length: 32 pages
Date of creation: 1989
Date of revision:
Handle: RePEc:fth:stocin:439

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Postal: UNIVERSITY OF STOCKHOLM, INSTITUTE FOR INTERNATIONAL ECONOMIC STUDIES, S- 106 91 STOCKHOLM SWEDEN.
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Related research

Keywords: unemployment ; wages ; costs;

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Cited by:
  1. Rebecca M. Blank & Richard B. Freeman, 1993. "Evaluating the Connection Between Social Protection and Economic Flexib ility," NBER Working Papers 4338, National Bureau of Economic Research, Inc.
  2. Tony Syme, 2000. "Public Policy and Unemployment in Interwar France: An Empirical Approach," Economics Series Working Papers 55, University of Oxford, Department of Economics.
  3. 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.
  4. Rebecca M. Blank, 1997. "No Easy Answers: Comparative Labor Market Problems in the United States Versus Europe," Macroeconomics 9711003, EconWPA.
  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. 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.
  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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