Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?

Gayle Allard and Peter Lindert

No 12460, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How have labor market institutions and welfare-state transfers affected jobs and productivity in Western Europe, relative to industrialized Pacific Rim countries? Orthodox criticisms of European government institutions are right in some cases and wrong in others. Protectionist labor-market policies such as employee protection laws seem to have become more costly since about 1980, not through overall employment effects, but through the net human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations in core sectors may also have reduced GDP, though here the evidence is less robust. By contrast, high general tax levels have shed the negative influence they might have had in the 1960s and 1970s. Similarly, other institutions closer to the core of the welfare state have caused no net harm to European jobs and growth. The welfare state's tax-based social transfers and coordinated wage bargaining have not harmed either employment or GDP. Even unemployment benefits do not have robustly negative effects.

JEL-codes: N13 N3 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-eec, nep-eff and nep-lab
Note: DAE PR
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Citations: View citations in EconPapers (12)

Published as Hatton, Timothy J., Kevin H. O’Rourke, and Alan M. Taylor (eds.) The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson. Cambridge MA: MIT Press, 2007.

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Working Paper: EURO-PRODUCTIVITY AND EURO-JOBS SINCE THE 1960s: WHICH INSTITUTIONS REALLY MATTERED? (2006)
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