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Adjustment capacity of labour markets of the Western Balkan countries


  • Vienna Institute for International Economic Studies


Study on the adjustment capacity to shocks of EU candidate and potential candidate countries of the Western Balkans, with a focus on labour markets, and background studies on several countries of the region. The main question addressed in this study is the performance of the labour markets in the Western Balkans; to find out whether they can deliver growth of employment and decline of unemployment in the medium run and whether they can withstand short-term shocks due to changes in demand or supply. The study finds that there is an important case for improving the rule of law and the quality of public services in general in the fight against very low participation and employment rates in the region, as well as very high unemployment. Wages, with some exceptions in specific sectors, do not seem to be mis-aligned with respect to productivity developments. There is some indication of possible positive effects from adjusting employment protection legislation, especially for women. The study also identifies an important role for income policies in some of the countries as an important complement to labour market policies.

Suggested Citation

  • DG ECFIN & Vienna Institute for International Economic Studies, 2008. "Adjustment capacity of labour markets of the Western Balkan countries," European Economy - Economic Papers 2008 - 2015 346, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0346

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    More about this item


    Adjustment capacity; external shocks; Western Balkan countries; South-East Europe; labour markets; EU candidate countries; potential candidate countries; employment protection legislation; rule of law; wages; productivity; taxwedge; remittances; migration;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances


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