IDEAS home Printed from https://ideas.repec.org/p/nbb/reswpp/200005-4.html
   My bibliography  Save this paper

Economic growth and the labor markets: Europe's challenge

Author

Listed:
  • Charles Wyplosz

    () (Graduate Institute of International Studies, Geneva
    CEPR)

Abstract

This paper reviews the accumulated theory and evidence on the sources of European underperformance in terms of economic growth and unemployment. It takes the view that the main problem lies with labor market institutions, ranging from negotiation structures to hiring and firing costs, unemployment benefits, minimum wages and taxation. It adopts the view that undesirable labor market structures have interacted with adverse shocks. An important question concerns the reasons behind reluctance in some countries to undertake reforms. The paper's thesis is that such reforms are not Pareto improving: a majority of the population stands to lose while a minority would benefit. The largest countries, where co-operation does not come naturally, are particularly vulnerable to a no-reform outcome. This observation is next used to outline possible scenarios. The paper concludes with a discussion of what could be the ECB contributions to either make reforms more acceptable or to cope with a separation of Europe in two groups of countries, those which have managed to implement reforms and those that will continue to operate with a high rate of equilibrium unemployment.

Suggested Citation

  • Charles Wyplosz, 2000. "Economic growth and the labor markets: Europe's challenge," Working Paper Research 08, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:200005-4
    as

    Download full text from publisher

    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp08.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. John M. Abowd & Francis Kramarz & Thomas Lemieux & David N. Margolis, 2000. "Minimum Wages and Youth Employment in France and the United States," NBER Chapters,in: Youth Employment and Joblessness in Advanced Countries, pages 427-472 National Bureau of Economic Research, Inc.
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    4. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 47-104, April.
    5. repec:hal:journl:halshs-00353896 is not listed on IDEAS
    6. Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402.
    7. Steve Nickell & Jan van Ours, 2000. "The Netherlands and the United Kingdom: a European unemployment miracle?," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 135-180, April.
    8. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    9. Gilles Saint-Paul, 1995. "The High Unemployment Trap," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 527-550.
    10. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
    11. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbb:reswpp:200005-4. 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: (). General contact details of provider: http://edirc.repec.org/data/bnbgvbe.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.