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Can Labour Market Institutions Explain Unemployment Rates in New EU Member States?

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Abstract

This study poses the question about whether labour market institutions can explain unemployment rates in the ten new European Union member states. In five out of the ten new member states, unemployment rates lie above the average in the 15 member states of the European Union (EU-15) that comprised the EU prior to May 2004. The study finds that labour market institutions in the acceding countries are less rigid than in the EU-15. Moreover, labour market institutions explain only a minor part of unemployment in the new EU member states. This does not mean that these countries have no labour market problems. Just as in the EU-15, a great deal of heterogeneity exists among the acceding countries. In some of them, labour market reforms could prove a key issue in improving employment performance. The main worry is the poor labour market performance in Poland and the Slovak Republic, where unemployment has risen to almost 20%. The main reasons for this growth are i) postponed restructuring in combination with tight monetary policy; ii) poor governance; and iii) an increasing labour force.

Suggested Citation

  • Sjef Ederveen & Laura Thissen, 2004. "Can Labour Market Institutions Explain Unemployment Rates in New EU Member States?," Economics Working Papers 027, European Network of Economic Policy Research Institutes.
  • Handle: RePEc:epr:enepwp:027
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    File URL: http://www.enepri.org/Publications/WP027.pdf
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    1. repec:alu:journl:v:2:y:2012:i:14:p:24 is not listed on IDEAS
    2. Emilie Jašová & Božena Kadeřábková & Klára Čermáková & Pavel Procházka, 2016. "Působení institucionálních faktorů na strukturální a cyklickou nezaměstnanost v zemích Visegrádské skupiny
      [Influence of Institutional Factors on Structural and Cyclical Unemployment in the Countri
      ," Politická ekonomie, University of Economics, Prague, vol. 2016(1), pages 34-50.
    3. Alexei Izyumov, 2010. "Human Costs of Post-communist Transition: Public Policies and Private Response," Review of Social Economy, Taylor & Francis Journals, vol. 68(1), pages 93-125.
    4. Primož Dolenc & Suzana Laporšek, 2012. "Taxing wages and sustainable labour market performance: empirical evidence from OECD and EU countries," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 4(3), pages 234-253.
    5. Primoz Dolenc & Suzana Laporsek, 2012. "Labour Taxation and Its Impact on Employment Growth," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 10(3 (Fall)), pages 301-318.
    6. Bozena Kaderabkova & Emilie Jasova, 2016. "Character And Intensity Of The Minimum Wage Influence On Unemployment In The Czech Republic And Slovakia," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 5(1), pages 37-49, March.
    7. Primož Dolenc & Suzana Laporšek, 2010. "Tax Wedge on Labour and its Effect on Employment Growth in the European Union," Prague Economic Papers, University of Economics, Prague, vol. 2010(4), pages 344-358.

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    Keywords

    labour market institutions; social security; wage bargaining; unemployment; transition economies; EU accession countries;

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