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The Surprising French Employment Performance: What Lessons?

  • Jean Pisani-Ferry

Although widely regarded as a textbook case of a rigid economy, in the late 1990s France was able to increase employment by 10 per cent within five years and to cut down unemployment by more than a fourth. This paper investigates what factors may account for this surprising performance. The evidence suggests a significant shift in the demand for labour, that can be partially ascribed to cuts in social security contributions introduced in the 1990s and to the later move to a 35 hours work week. Although a large proportion of companies reported difficulties in hiring, the sharp reduction in unemployment did not result in significant wage pressure. Nevertheless, new measures aiming at fostering labour supply were introduced in the early 2000s. The emphasis on stimulating labour demand that characterised French labour market policies in the 1990s was more successful than expected by observers. This lends support to the advocates of active labour market policies. However, the budgetary cost of this approach has also been high. Whether this strategy is sustainable in the medium run is likely to become increasingly an issue.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-11/cesifo1_wp1078.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1078.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1078
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  1. Yannick L’Horty & Denis Anne & Michel Dollé, 2002. "Transferts sociaux locaux et retour à l’emploi ; suivi d'un commentaire de Michel Dollé, et d'une réponse au commentaire, de Denis Anne et Yannick L'Horty," Économie et Statistique, Programme National Persée, vol. 357(1), pages 49-78.
  2. repec:spo:wpecon:info:hdl:2441/1646 is not listed on IDEAS
  3. Éric Heyer & Xavier Timbeau, 2000. "35 heures : réduction réduite," Revue de l'OFCE, Programme National Persée, vol. 74(1), pages 53-95.
  4. Bernard Salanié & Guy Laroque, 2000. "Une décomposition du non-emploi en France," Économie et Statistique, Programme National Persée, vol. 331(1), pages 47-66.
  5. repec:fth:inseep:2000-01 is not listed on IDEAS
  6. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  7. Johanna Melka & Nanno Mulder & Laurence Nayman & Soledad Zignago, 2003. "Skills, Technology and Growth is ICT the Key to Success ? An Analysis of ICT Impact on French Growth," Working Papers 2003-04, CEPII research center.
  8. repec:spo:wpecon:info:hdl:2441/4782 is not listed on IDEAS
  9. Marc Gurgand & David Margolis, 2001. "RMI et revenus du travail : une évaluation des gains financiers à l'emploi," Économie et Statistique, Programme National Persée, vol. 346(1), pages 103-122.
  10. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  11. David N. Margolis, 2002. "Licenciements collectifs et délais de reprise d'emploi," Économie et Statistique, Programme National Persée, vol. 351(1), pages 65-85.
  12. Olivier J. Blanchard & Jean-Paul Fitoussi, 1998. "Croissance et chômage," Sciences Po publications info:hdl:2441/4782, Sciences Po.
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