Roads from Unemployment : Institutional Complementarities in Product and Labor Markets

Sammanfattning: Bringing down unemployment is a top priority for governments across the industrialized world, regardless of ideological bent. What is at issue in the political debate is not if unemployment should be combatted, but by what means. Two frequently discussed solutions to the problem of unemployment are corporatist wage bargaining and complete deregulation of all product and labor markets. This book maintains both these views are too simplistic. It shows theoretically as well as empirically that the particular configuration of institutions in a country is much more important for its employment performance than is the presence or absence of individual institutions. Contrary to conventional wisdom, the study argues there is more than one road to full employment. What sets these different roads apart is mainly their distributional consequences. Based on the analysis of the employment effects of various configurations of institutions, the book also critiques the common practice of treating wage bargaining institutions as historical givens. Fighting unemployment requires an understanding not only of the effects of different labor market institutions, but also of the conditions under which certain institutions arise and remain stable. Toward this end the study develops and tests an explanation of why wage bar-gaining institutions are what they are in different countries. The main finding is that the influential view that current bargaining practices are much more the result of deep-seated historical development than of presently perceived need is considerably exaggerated.