Institutions and Performance in European Labour Markets: Taking a Fresh Look at Evidence

Posted: 4 Jan 2012

See all articles by Alfonso Arpaia

Alfonso Arpaia

European Commission, Directorate General for Economic and Financial Affairs

Gilles Mourre

European Union - European Commission

Date Written: February 2012

Abstract

This paper presents a selective survey of the recent literature on labour market institutions and offers new empirical EU‐based evidence on the impact of labour market reforms on employment and labour market adjustment. Although the literature traditionally treats labour market institutions as exogenous, attention shifted recently towards understanding the underlying causes of specific institutional arrangements. As a consequence, the literature highlights the great importance of an efficient policy design exploiting these interactions wisely and identifies general principles for achieving an efficient policy design at both macro and micro levels. Although empirical evidence does not show a major change in terms of intensity of labour market reform after the setting of the Economic and Monetary Union and the creation of the euro, the reforms aiming at strengthening the labour market attachment of vulnerable groups tend to have been successful both in raising their employment and increasing labour market adjustment.

Keywords: Endogeneity, Institutions, Labour market functioning, Policy design, Political economy

Suggested Citation

Arpaia, Alfonso and Mourre, Gilles, Institutions and Performance in European Labour Markets: Taking a Fresh Look at Evidence (February 2012). Journal of Economic Surveys, Vol. 26, Issue 1, pp. 1-41, 2012, Available at SSRN: https://ssrn.com/abstract=1979257 or http://dx.doi.org/10.1111/j.1467-6419.2009.00623.x

Alfonso Arpaia (Contact Author)

European Commission, Directorate General for Economic and Financial Affairs ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

HOME PAGE: http://europa.eu.int/comm/economy_finance/index_en.htm

Gilles Mourre

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

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