IDEAS home Printed from https://ideas.repec.org/a/oup/oxford/v11y1995i1p63-72.html
   My bibliography  Save this article

The Limits of Wage Flexibility to Curing Unemployment

Author

Listed:
  • Freeman, Richard

Abstract

This article takes a critical look at the view that wage flexibility, US-style, is the panacea to European unemployment problems. It shows that the wage flexibility in the US in the 1980s-1990s was associated with rising inequality and falling real wages for many workers, reduced rather than increased employment for the low-paid and less-skilled, whose wages fell, and arguably contributed to the growth of a significant criminal population. The proportion of American men incarcerated comes close to the proportion of European men long-term unemployed. The limits to wage flexibility in curing unemployment noted in the paper does not mean the reductions in pay may not, under some circumstances, raise employment, but rather that by themselves massive pay cuts for the low-paid are no cure to economic problems. Copyright 1995 by Oxford University Press.

Suggested Citation

  • Freeman, Richard, 1995. "The Limits of Wage Flexibility to Curing Unemployment," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 63-72, Spring.
  • Handle: RePEc:oup:oxford:v:11:y:1995:i:1:p:63-72
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Teraji, Shinji, 2011. "An economic analysis of social exclusion and inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 217-223, May.
    2. Bande, Roberto & Fernández, Melchor & Montuenga, Víctor, 2008. "Regional unemployment in Spain: Disparities, business cycle and wage setting," Labour Economics, Elsevier, vol. 15(5), pages 885-914, October.
    3. Loïc Cadiou & Stéphanie Guichard & Mathilde Maurel, 2000. "Disparités institutionnelles et flexibilité des marchés du travail dans l'UE," Économie et Statistique, Programme National Persée, vol. 332(1), pages 49-63.
    4. Richard Freeman, 2005. "Labour market institutions without blinders: The debate over flexibility and labour market performance," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 129-145.
    5. Lieve De Lathouwer, 2002. "Le piège au chômage : quelles reformes sociales pour augmenter l'offre de travail ?," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(3), pages 61-75.
    6. Friso Schlitte, 2012. "Local human capital, segregation by skill, and skill‐specific employment growth," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 85-106, March.
    7. Koen Burggraeve & Philip Du Caju, 2003. "Reductions in employers' social security contributions in a wage norm and automatic indexing régime," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 46(4), pages 31-64.
    8. Coralie Perez, 1999. "La politique publique de l'emploi aux Etats-Unis," Post-Print halshs-00714404, HAL.
    9. Berthold, Norbert & Fehn, Rainer & Thode, Eric, 1999. "Rigide Arbeitsmärkte und ungleiche Einkommensverteilung: Ein unlösbares Dilemma?," Discussion Paper Series 31, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    10. Loïc Cadiou & Stéphanie Guichard & Mathilde Maurel, 1999. "La diversité des marchés du travail en Europe : Quelles conséquences pour l'Union Monétaire," Working Papers 1999-11, CEPII research center.
    11. Ewald Nowotny, 1999. "The Role of Macroeconomic Policy in Overcoming Slow Economic Growth - International Comparisons and Policy Perspectives," Working Papers geewp01, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    12. Assoc. prof. Claudiu George Bocean Ph. D, 2015. "Relationships Between Wages And Employment Indicators," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(24), pages 41-50, APRIL.
    13. Annamaria Simonazzi & Paola Villa, 1999. "Flexibility and Growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 281-311.
    14. BURGGRAEVE Koen & DU CAJU Philip, 2010. "How Do Reference Values for Wages and Wage Indexing Influence the Impact of Labour Tax Reductions?," EcoMod2003 330700028, EcoMod.
    15. Duranton, Gilles, 2004. "The economics of production systems: Segmentation and skill-biased change," European Economic Review, Elsevier, vol. 48(2), pages 307-336, April.
    16. repec:spo:wpecon:info:hdl:2441/711 is not listed on IDEAS
    17. Freeman, Richard B., 1998. "War of the models: Which labour market institutions for the 21st century?1," Labour Economics, Elsevier, vol. 5(1), pages 1-24, March.
    18. Altman, Morris, 2006. "Involuntary unemployment, macroeconomic policy, and a behavioral model of the firm: Why high real wages need not cause high unemployment," Research in Economics, Elsevier, vol. 60(2), pages 97-111, June.
    19. Francesca Bettio & Samuel Rosenberg, 1999. "Labour Markets and Flexibility in the 1990s: The Europe-USA opposition revisited," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 269-279.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:11:y:1995:i:1:p:63-72. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://academic.oup.com/oxrep .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oxrep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.