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Employment regulation and patterns of work in EC countries
David Grubb and William Wells
This paper constructs indicators for the strength of employment regulation in EC countries, based upon fairly detailed descriptions of restrictions on dismissals, fixed-term employment contracts, temporary work agencies, and working time. It then considers a variety of indicators for patterns of work, such as the ratio of employee employment to population, concentration in the distribution of weekly hours worked, and temporary workers who would have preferred a permanent job. Many regulations appear to be influencing their targets as expected, but there is also evidence that regulation has undesirable indirect effects, reducing the overall level of the regulated forms of employment and increasing dissatisfaction among non-standard workers.
Unemployment persistence
Jorgen Elmeskov and Maitland MacFarlan
This paper examines recent evidence relating to the persistence of high rates of unemployment in many OECD countries. It assesses the empirical relevance of some possible sources of persistence, including changes in the natural rate of unemployment, and slow labour market adjustment towards a longer-run equilibrium. While elements of various hypotheses may be needed to fully explain persistence, the evidence - while not conclusive - suggests that slow aujustment of both wages and employment is an important part of the story.
The role of real and nominal rigidities in macroeconomic adjustment: a comparative study of the G3 economies
Dave Turner, Pete Richardson and Sylvie Rauffet
This paper examines whether divergent behaviour of output, inflation and unemployment in the G3 countries can be explained by differences in real and nominal rigidities in wage and price formation. Such rigidities are found to be much higher in the USA and Germany than Japan, reflected in correspondingly large disturbances to the real economy following demand or supply shocks. In Japan, the flexibility of hours worked and labour force participation are further reasons why disturbances to unemployment are small. The analysis further suggests that the USA may be particularly vulnerable to supply shocks originating from changes in “wedge” variables, and Germany to changes in trend productivity growth.
Interpreting unemployment: the role of labour-force participation
Jorgen Elmeskov and Karl Pichelmann
This paper presents empirical evidence on trends and cycles of unemployment and labour-force participation. Some of the mechanisms behind the observed developments are analysed. The observed interplay between unemployment and participation has implications for the interpretation of unemployment as an economic and social indicator. The paper ends by presenting some unexplained puzzles concerning the interplay between trends and cycles of unemployment and labour-force participation.
Centralisation of wage bargaining and macroeconomic performance - a survey
Lars Calmfors
The paper sets out the theoretical arguments underlying the hypothesis of a hump-shaped relationship between the degree of centralisation of wage bargaining and real wages. Subsequently, it considers extensions to the basic model, drawing also on practical experience in various countries, and investigates the various dimensions of centralisation in the wage formation process. A review of the empirical literature in the field comes up with mixed results. This is not surprising given the diversity of effects discussed in the paper, which motivates why unambiguous policy conclusions do not seem possible.
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