Some Thoughts on Macroeconomic Fluctuations and the Timing of Labor Market Reform

Gilles Saint-Paul

No 611, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, I analyze the pros and cons of implementing structural reforms of the labor market in booms vs. recessions, in light of considerations of social efficiency, political viability, and macroeconomic fine tuning. While the optimal timing of a reform depends on the relative importance of several conflicting effects, it seems clear that a reform should be accompanied by an expansionary macroeconomic policy. This makes structural reform more problematic in the context of the European Monetary Union.

Keywords: labour market reforms; unemployment; employment protection; monetary union; firing costs; political economy (search for similar items in EconPapers)
JEL-codes: E32 E52 E61 J6 K31 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2002-10
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Citations: View citations in EconPapers (8)

Published - pubished in: Solow, Robert M. (ed.): Structural Reform and Macroeconomic Policy, (International Economic Association), Palgrave MacMillan, 2004

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