Working paper no. 13/2005


Labour market regimes in Europe and labour market performance

During the 1990s, a number of predominantly smaller EU countries implemented reforms of their labour market policies. As a result, their structural unemployment is today comparable with U.S. figures. However, structural unemployment in the EU15 countries as a whole remains at an historical height. This paper evaluates the labour market policies in the EU15 countries. Statistical methods show that different regimes of labour market policies exist within the EU, and that the performance of the regimes, in terms of structural and long-term unemployment, is closely related to the implemented policies in the regimes. In particular, the North-European and Anglo-Saxon regimes display better performance than the Central and South-European regimes. The extend to which reforms in labour market policies have contributed to the reduction in structural unemployment in the second half of the 1990s is assessed using results from panel-data regressions of 19 OECD countries. Finally, the actual policies implemented, relating to both labour market and employment policies, are described in some detail.

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Author: Søren Gaard 
Contact: Morten Binder - e-mail: