IDEAS home Printed from https://ideas.repec.org/a/taf/irapec/v13y1999i3p281-311.html
   My bibliography  Save this article

Flexibility and Growth

Author

Listed:
  • 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.

Suggested Citation

  • Annamaria Simonazzi & Paola Villa, 1999. "Flexibility and Growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 281-311.
    • Handle: RePEc:taf:irapec:v:13:y:1999:i:3:p:281-311
    DOI: 10.1080/026921799101562
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/026921799101562
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/026921799101562?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Samuelson, P.A., 1997. "Wherein Do the European and American Models Differ?," Papers 320, Banca Italia - Servizio di Studi.
    2. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June.
    3. Bertola, Giuseppe & Rogerson, Richard, 1997. "Institutions and labor reallocation," European Economic Review, Elsevier, vol. 41(6), pages 1147-1171, June.
    4. Blanchard, Olivier & Jimeno, Juan F, 1995. "Structural Unemployment: Spain versus Portugal," American Economic Review, American Economic Association, vol. 85(2), pages 212-218, May.
    5. Arne Heise, 1997. "A Different Transatlantic View," Challenge, Taylor & Francis Journals, vol. 40(3), pages 50-56, May.
    6. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    7. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-308, May.
    8. Atkinson, A B, 1996. "Income Distribution in Europe and the United States," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 15-28, Spring.
    9. repec:sae:niesru:v:155:y::i:1:p:81-89 is not listed on IDEAS
    10. 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.
    11. Jackman, R. & Layard, R. & Nickell, S., 1996. "Combatting unemployment: is flexibility enough?," LSE Research Online Documents on Economics 47446, London School of Economics and Political Science, LSE Library.
    12. Stephen Rose, 1999. "Is Mobility in the United States Still Alive? Tracking career opportunities and income growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 417-436.
    13. Dreze, Jacques H. & Malinvaud, Edmond, 1994. "Growth and employment: The scope of a European initiative," European Economic Review, Elsevier, vol. 38(3-4), pages 489-504, April.
    14. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
    15. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
    16. Annamaria Simonazzi & Paola Villa, 1996. "Employment, Growth and Income Inequality: some open Questions," Department of Economics Working Papers 9601, Department of Economics, University of Trento, Italia.
    17. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June.
    18. Richard B. Freeman, 1996. "Why Do So Many Young American Men Commit Crimes and What Might We Do about It?," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 25-42, Winter.
    19. Snower, Dennis J., 1994. "The Simple Economics of Benefit Transfers," CEPR Discussion Papers 1086, C.E.P.R. Discussion Papers.
    20. Ana L. Revenga & Samuel Bentolila, 1995. "What Affects the Employment Rate Intensity of Growth?," Working Papers 9517, Banco de España.
    21. Laurence M. Ball, 1997. "Disinflation and the NAIRU," NBER Chapters, in: Reducing Inflation: Motivation and Strategy, pages 167-194, National Bureau of Economic Research, Inc.
    22. André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
    23. Snower, Dennis J, 1994. "Converting Unemployment Benefits into Employment Subsidies," American Economic Review, American Economic Association, vol. 84(2), pages 65-70, May.
    24. Paul Geroski & Paul Gregg & John van Reenen, 1995. "Market Imperfections and Employment," OECD Jobs Study Working Papers 5, OECD Publishing.
    25. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
    26. Rowthorn, Robert, 1995. "Capital Formation and Unemployment," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 26-39, Spring.
    27. Bruno Contini & Fabio Rapiti, 1999. "'Young In, Old Out' Revisited: New Patterns of Employment Replacement in the Italian Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 395-415.
    28. Faini, Riccardo & Galli, Giampaolo & Gennari, Pietro & Rossi, Fulvio, 1997. "An empirical puzzle: Falling migration and growing unemployment differentials among Italian regions," European Economic Review, Elsevier, vol. 41(3-5), pages 571-579, April.
    29. Pain, Nigel & Weale, Martin & Young, Garry, 1997. "Britain's Fiscal Problems," Economic Journal, Royal Economic Society, vol. 107(443), pages 1142-1156, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Claudio De Vincenti, 2007. "‘Baumol'S Disease’, Production Externalities And Productivity Effects Of Intersectoral Transfers," Metroeconomica, Wiley Blackwell, vol. 58(3), pages 396-412, July.
    2. Gabriella BERLOFFA & Eleonora MATTEAZZI & Alina ŞANDOR & Paola VILLA, 2016. "Youth employment security and labour market institutions: A dynamic perspective," International Labour Review, International Labour Organization, vol. 155(4), pages 651-678, December.
    3. Jacqueline O’Reilly & Werner Eichhorst & András Gábos & Kari Hadjivassiliou & David Lain & Janine Leschke & Seamus McGuinness & Lucia Mýtna Kureková & Tiziana Nazio & Renate Ortlieb & Helen Russ, 2015. "Five Characteristics of Youth Unemployment in Europe," SAGE Open, , vol. 5(1), pages 21582440155, March.
    4. Robert Buchele & Jens Christiansen, 1999. "Employment and Productivity Growth in Europe and North America: The Impact of Labor Market Institutions," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 313-332.
    5. Raul Eamets, 2004. "Labour market flows and adjustment to macroeconomic shocks in the Baltic States," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 47-71.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
    2. Assar Lindbeck, 1996. "The West European employment problem," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(4), pages 609-637, December.
    3. Lindbeck, Assar, 1997. "The European Employment Problem," Seminar Papers 616, Stockholm University, Institute for International Economic Studies.
    4. Raul Eamets, 2004. "Labour market flows and adjustment to macroeconomic shocks in the Baltic States," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 47-71.
    5. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    6. Ronald Schettkat & Rongrong Sun, 2009. "Monetary policy and European unemployment," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 94-108, Spring.
    7. Horst Feldmann, 2005. "Labour Market Institutions and Labour Market Performance in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 47-82.
    8. Ravi Balakrishnan, 2001. "The interaction of firing costs and on-the-job search: an application of a search theoretic model to the Spanish labour market," Working Papers 0102, Banco de España.
    9. Assar Lindbeck, 1998. "How can economic policy strike a balance between economic efficiency and income equality?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 295-336.
    10. Stefano Scarpetta, 1998. "Labor Market Reforms and Unemployment: Lessons from the Experience of the OECD Countries," Research Department Publications 4136, Inter-American Development Bank, Research Department.
    11. Gregg, Paul & Manning, Alan, 1997. "Skill-biassed change, unemployment and wage inequality," European Economic Review, Elsevier, vol. 41(6), pages 1173-1200, June.
    12. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. 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.
    14. Enrique López-Bazo & Tomás del Barrio & Manuel Artis, 2002. "The regional distribution of Spanish unemployment: A spatial analysis," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(3), pages 365-389.
    15. Tiiu Paas & Raul Eamets, 2002. "Labour Flexibility and Migration in the EU Eastward Enlargement Context: The Case of the Baltic States," Eastward Enlargement of the Euro-zone Working Papers wp11, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Sep 2002.
    16. Rod Cross & Douglas Strachan, 2001. "Three Pillars of Conventional Wisdom," Review of Political Economy, Taylor & Francis Journals, vol. 13(2), pages 181-200.
    17. Agenor,Pierre-Richard, 2003. "The mini-integrated macroeconomic model for poverty analysis : a framework for analyzing the unemployment and poverty effects of fiscal and labor market reforms," Policy Research Working Paper Series 3067, The World Bank.
    18. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.
    19. Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
    20. repec:eee:labchp:v:3:y:1999:i:pc:p:2985-3028 is not listed on IDEAS
    21. Jonas Agell, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, Verein für Socialpolitik, vol. 3(2), pages 107-135, May.

    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:taf:irapec:v:13:y:1999:i:3:p:281-311. 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: http://www.tandfonline.com/CIRA20 .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIRA20 .

    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.