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Labor Market Rigidities: At the Root of Unemployment in Europe

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  • Horst Siebert

Abstract

This paper studies the major institutional changes at the root of the increase in the west European unemployment trade in the last quarter century from below 3 percent to 11 percent. The institutional characteristics of wage bargaining and the legal rules hamper the self-equilibrating function of the labor market. The reservation wage, raised by the welfare state's rise, has affected the bargaining process, the wage level and the wage structure. Econometric evidence is presented. Since the mid-1980s, differences emerge, and the Scandinavian, the French-Mediterranean, the German, and the British-Dutch approach to the labor market can be distinguished.

Suggested Citation

  • Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
  • Handle: RePEc:aea:jecper:v:11:y:1997:i:3:p:37-54
    Note: DOI: 10.1257/jep.11.3.37
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.11.3.37
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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