Demand- and Supply-Side Policies and Unemployment: Policy Implications of the Insider-Outsider Approach

Assar Lindbeck and Dennis Snower

No 329, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The paper analyzes a variety of government policies that can stimulate employment when unemployment is generated through the conflicting of interest between insiders and outsiders. It also provides guidelines for identifying policies that may be ineffective. We show how supply side policies can stimulate employment by raising worker productivity or reducing labor costs. Our analysis indicates that when wages and prices are flexible, product demand policies have no significant effect on employment unless these policies stimulate labor productivity, the entry of firms, capital utilization or investment.

Keywords: Employment; Government Policy; Labour Productivity; Unions; Wages (search for similar items in EconPapers)
Date: 1989-08
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Citations: View citations in EconPapers (3)

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Working Paper: DEMAND- AND SUPPLY-SIDE POLICIES AND UNEMPLOYMENT: POLICY IMPLICATIONS OF THE INSIDER-OUTSIDE APPROACH (1989)
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