Euro-productivity and euro-jobs since the 1960s: which institutions mattered?

Abstract

How have labor market institutions and welfare-state transfers affected jobs and productivity in Europe? Many studies have tackled this question, with mixed results. This paper proposes an eclectic approach and gives a clearer answer to the issue. Orthodox criticisms of European government institutions are right in some cases and wrong in others. Labor-market policies such as employment protection laws have become more costly since 1980 through their human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations may have reduced GDP, though the evidence is less robustProductivity, Employment protection legislation, unemployment benefits, social spending, welfare state