On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance

Jonas Agell

Working Papers from Uppsala - Working Paper Series

Abstract: The common view that far-reaching labour market deregulation is the only remedy for high European unemployment is too simplistic. First, the ecidence suggests that deeply rooted social customs are an important cause of wage rigidity, going beyonf the legal constraints emphasized in the political debate. Second, in a second-best setting, a compressed wage structure may generate an efficiency gain. Finally, based on simple plots of the relation between labour market institutions and openness in OECD countries, I conclude that the globalization of economic activity may lead to increased demand for various labour market rigidities.

Keywords: LABOUR MARKET; WAGES; UNEMPLOYMENT; MIGRATION (search for similar items in EconPapers)
JEL-codes: J30 J50 J60 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1998
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Related works:
Journal Article: On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance (1999)
Working Paper: On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:uppaal:1998:17

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