DP4328 Why are European Countries Diverging in their Unemployment Experience?

Author(s): Gilles Saint-Paul

Publication Date: March 2004

Keyword(s): unemployment , labour market reform , ideology , political economy , flexibility

JEL(s): D70 , E24 , J60

Programme Areas: International Macroeconomics , Labour Economics

Link to this Page: www.cepr.org/pubs/dps/DP4328.asp

During the nineties, unemployment fell in a number of European countries while it remained high in others. This Paper discusses potential causes for that evolution in light of recent economic research, emphasizing obstacles to reform due to political constraints, the prevalence of ideology, and agency issues within those bureaucracies concerned with the unemployment problem. Some speculative thoughts are offered as to why those factors might be more stringent in countries where unemployment remained high.