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Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?

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  • Gayle Allard
  • Peter H. Lindert

Abstract

How have labor market institutions and welfare-state transfers affected jobs and productivity in Western Europe, relative to industrialized Pacific Rim countries? Orthodox criticisms of European government institutions are right in some cases and wrong in others. Protectionist labor-market policies such as employee protection laws seem to have become more costly since about 1980, not through overall employment effects, but through the net human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations in core sectors may also have reduced GDP, though here the evidence is less robust. By contrast, high general tax levels have shed the negative influence they might have had in the 1960s and 1970s. Similarly, other institutions closer to the core of the welfare state have caused no net harm to European jobs and growth. The welfare state%u2019s tax-based social transfers and coordinated wage bargaining have not harmed either employment or GDP. Even unemployment benefits do not have robustly negative effects.

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  • Gayle Allard & Peter H. Lindert, 2006. "Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?," NBER Working Papers 12460, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12460
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    3. GAYLE ALLARD & Cristina Simón & RAQUEL MARTIN, 2007. "Capturing Talent: Generation Y and European Labor Markets," Working Papers Economia wp07-15, Instituto de Empresa, Area of Economic Environment.
    4. Dew-Becker, Ian & Gordon, Robert J, 2008. "The Role of Labour Market Changes in the Slowdown of European Productivity Growth," CEPR Discussion Papers 6722, C.E.P.R. Discussion Papers.
    5. Karl Aiginger & Alois Guger & Thomas Leoni & Ewald Walterskirchen, 2007. "Reform Perspectives on Welfare State Models in Global Capitalism," WIFO Working Papers 303, WIFO.
    6. Albert van der Horst & Hugo Rojas-Romagosa & Leon Bettendorf, 2009. "Does employment affect productivity?," CPB Discussion Paper 119, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Alberto Behar, 2009. "Tax Wedges, Unemployment Benefits and Labour Market Outcomes in the New EU Members," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(1), pages 069-092, March.
    8. Ton Van Schaik & Theo van De Klundert, 2011. "Employment Protection Legislation and Catching up," Post-Print hal-00747937, HAL.

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    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy

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