IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Wage gaps, hysteresis and structural unemployment: The West German labour market in the seventies and eighties

  • Paqué, Karl-Heinz
Registered author(s):

    In recent years, there has been an intense debate among economists about the causes of unemployment in Europe. Broadly speaking, the views can be grouped into two familiar camps: those with a more (neo-)classical outlook - stressing the importance of factor price movements, institutional rigidities and structural change - and those with a more Keynesian leaning, focusing on the restrictive fiscal policy stance in Europe or the long-term hyster- 2) esis effects of the worldwide recession of 1981-82. Lately, a new intermediate position has been added by Fitoussi, Phelps (1988), who point to the crowding-out of investment in Europe through the peculiar American policy mix of the eighties, thus making the United States the culprit of Europe's malaise. All major Keynesian positions (and also the one by Fitoussi, Phelps) rely on the tacit, but crucial assumption that - by and large - the unemployment of the eighties is an analytically new phenomenon to be explained separately from the experience of the seventies which is by now grudgingly admitted to have been a period of more classical than Keynesian unemployment. It is the purpose of this paper to show that this assumption is not warranted so that, at least in some important respectsj the eighties are simply the natural continuation and maybe culmination of developments which go back to the seventies. Empirically, we shall make our case for one country only, the Federal Republic of Germany, but similar lines of reasoning may apply to other EEC countries, of course with proper adjustments and qualifications.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 358.

    in new window

    Date of creation: 1989
    Handle: RePEc:kie:kieliw:358
    Contact details of provider: Postal:
    Kiellinie 66, D-24105 Kiel

    Phone: +49 431 8814-1
    Fax: +49 431 85853
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Rod Cross, 2000. "Hysteresis and Emu," Metroeconomica, Wiley Blackwell, vol. 51(4), pages 367-379, November.
    2. Alan S. Blinder, 1988. "The Challenge of High Unemployment," NBER Working Papers 2489, National Bureau of Economic Research, Inc.
    3. Bean, C R & Layard, P R G & Nickell, S J, 1986. "The Rise in Unemployment: A Multi-country Study," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S1-22, Supplemen.
    4. Jeffrey Sachs, 1986. "High Unemployment in Europe: Diagnosis and Policy Implications," NBER Working Papers 1830, National Bureau of Economic Research, Inc.
    5. Coen, Robert M & Hickman, Bert G, 1988. "Is European Unemployment Classical or Keynesian?," American Economic Review, American Economic Association, vol. 78(2), pages 188-193, May.
    6. Klodt, Henning, 1988. "Industrial policy and repressed structural change in West Germany," Kiel Working Papers 322, Kiel Institute for the World Economy (IfW).
    7. Lindbeck, Assar & Snower, Dennis J, 1988. "Long-term Unemployment and Macroeconomic Policy," American Economic Review, American Economic Association, vol. 78(2), pages 38-43, May.
    8. Dreze, Jacques H., 1987. "Underemployment equilibria : From theory to econometrics and policy," European Economic Review, Elsevier, vol. 31(1-2), pages 9-34.
    9. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
    10. Symons, J & Layard, R, 1984. "Neoclassical Demand for Labour Functions for Six Major Economies," Economic Journal, Royal Economic Society, vol. 94(376), pages 788-99, December.
    11. Jackman, R & Roper, S, 1987. "Structural Unemployment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(1), pages 9-36, February.
    12. Jacques R. Artus, 1984. "The Disequilibrium Real Wage Rate Hypothesis: An Empirical Evaluation (L'hypothèse du déséquilibre du taux de salaire réel: évaluation empirique) (La hipótesis de desequilibrio del salario real:," IMF Staff Papers, Palgrave Macmillan, vol. 31(2), pages 249-302, June.
    13. Franz, Wolfgang & Konig, Heinz, 1986. "The Nature and Causes of Unemployment in the Federal Republic of Germany since the 1970s: An Empirical Investigation," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S219-44, Supplemen.
    14. Giersch, Herbert, 1987. "Economic policies in the age of Schumpeter," European Economic Review, Elsevier, vol. 31(1-2), pages 35-52.
    15. Blanchard, Olivier Jean & Summers, Lawrence H, 1988. "Beyond the Natural Rate Hypothesis," American Economic Review, American Economic Association, vol. 78(2), pages 182-187, May.
    16. Michael C. Burda & Jeffrey D. Sachs, 1987. "Institutional Aspects of High Unemployment in the Federal Republic of Germany," NBER Working Papers 2241, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:kie:kieliw:358. 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: (Dieter Stribny)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.