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Are European Labor Markets As Awful As All That?


  • Richard Freeman


"The standard explanation of why advanced Europe has generated less work per adult thanthe US is that something is seriously amiss with EU labor markets. The theme of this piece issimple. Compared to an ideal competitive market, EU labor markets fall seriously short, butcompared to labor markets in the US and to other markets in advanced capitalist countries,EU labor markets do not live up to their awful press. The variety of labor market institutionsamong EU countries, moreover, reveals a much richer picture of performance and diversitythan the blanket condemnation of inflexibility suggests. I make my case in four propositions,with supporting evidence. My comparisons are with the actual labor market in the US andwith other real world markets, not with the economists' dream ideal competitive markets. Ireview briefly the evidence that labor markets in the EU have performed worse on thequantity side of the market but better on the price or wage side of the market than the USlabor market, then consider the extent to which differences in outcomes are attributable todifferences in the performance of labor markets."

Suggested Citation

  • Richard Freeman, 2004. "Are European Labor Markets As Awful As All That?," CEP Discussion Papers dp0644, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0644

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    Cited by:

    1. Nick Adnett & Stephen Hardy, 2007. "The peculiar case of age discrimination: Americanising the European social model?," European Journal of Law and Economics, Springer, vol. 23(1), pages 29-41, February.
    2. Chatterji, Monojit, 2008. "Training hold up and social labour markets," Labour Economics, Elsevier, vol. 15(2), pages 202-214, April.

    More about this item


    labour markets; US; EU; labour market institutions;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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