The Gradual Transformation of Continental European Labor Markets: France and Germany Compared

Werner Eichhorst

No 2675, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Germany and France are both Continental European welfare states with severe labor market problems such as low employment and high and persistent unemployment which can be explained by labor market institutions that inhibit labor market adaptability. This paper analyzes recent reforms in core areas such as active and passive labor market policies, employment protection and the funding of social policies through taxes and social security contributions in both countries. It shows if and to what extent more favourable conditions for employment growth could be created. The paper identifies the limits of partial reforms in terms of the creation of more efficient labor market institutions although these reforms are highly plausible in politico-economic terms. However, the cumulative effect of sequences of marginal changes leads to a gradual medium-term transformation of both Continental European labor markets.

Keywords: Germany; France; labor market institutions; institutional changes; political economy (search for similar items in EconPapers)
JEL-codes: J48 J58 J68 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-03
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (11)

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