Research Projects

Research Resources

CEPA Research Projects

Liberalization and Employment Performance in the OECD
A Project Funded by the MacArthur Foundation
Directed by David Howell

It is widely accepted in economic policy circles that a necessary condition for good labor market performance (low levels of structural unemployment) is the maintenance of highly flexible labor markets. For example, summarizing what they term the "dominant view," a recent IMF survey paper underscored the need for "structural labor market reforms" in most OECD member countries, with particular attention to "the wage bargaining framework, the severity of various types of labor market regulations (job protection legislation, the flexibility of work arrangements), and the generosity of income replacement in unemployment benefit or welfare schemes." If this is right, the presence of labor market rigidities at the beginning of the 1990s and the extent to which structural reforms have been implemented over the course of the decade should do a good job of accounting for the employment performance of OECD member countries in the 1990's. Indeed, this is the contention of the OECD's Member Countries' Experience, a follow-up report to the highly influential OECD Jobs Study. According to the report, "Developments in structural unemployment over the 1990s to a large extent reflect the progress made in implementing the OECD Jobs Strategy."

With financial support from the MacArthur Foundation, this project takes a critical look at this dominant view. The core of the project are five case studies of nine OECD member countries, published as CEPA working papers, that specifically address the extent to which labor market rigidities and the adoption of structural labor market reforms provides a good account of recent employment performance. The nine countries are Denmark, Germany, Ireland, the Netherlands, New Zealand, Sweden, Spain, the UK and the U.S.

The project also includes a paper that will critically assess the recent highly influential empirical literature that explains the pattern of unemployment across the OECD member countries by the rigidities imposed by "employment-unfriendly" labor market institutions. This paper will be available later this spring.

Events:

• Workshop on Liberalization and Employment Performance in the OECD, May 18-19, 2001
• Roundtable Discussion: "Do labor market rigidities explain the employment problems of developed countries in recent decades?"
  With Andrew Glyn (Oxford University), David Howell (New School University) and John Schmitt (Economic Policy Institute).
  Friday, April 19, 2002, 4:30-6:30 p.m. Machinist Room (Mezzanine), New School University, 65 Fifth Avenue.

Links:

• Project on Impacts of Globalization: Finance, Distribution, Labor and Social Policy (1999-2001)

Publications:

• Forthcoming in Fighting Unemployment: The Limits of Free Market Orthodoxy, ed. by David R. Howell (Oxford University Press).
  Download [Chapter 1, Chapter 2, Chapter 3, Chapter 4].
  
• CEPA Working Paper 2002-01. David R. Howell (CEPA). Increasing Earnings Inequality and Unemployment in Developed Countries: Markets, Institutions and the "Unified Theory." January 2002. Download (254 KB).
• CEPA Working Paper 2002-02. Rafael Muñoz de Bustillo Llorente (University of Salamanca). Spain and the Neoliberal Paradigm. January 2002. Download (320 KB).
• CEPA Working Paper 2002-03. Andrew Glyn (Corpus Christi College). Labour Market Success and Labour Market Reform: Lessons from Ireland and New Zealand. January 2002. Download (121 KB).
• CEPA Working Paper 2002-04. Peter Plougmann (Oxford Insight) and Per Kongshøj Madsen (University of Copenhagen). Flexibility, Employment Development and Active Labour Market Policy in Denmark and Sweden in the 1990s. January 2002. Download (203 KB).
• CEPA Working Paper 2002-05. Ronald Schettkat (Utrecht University). Regulation in the Dutch and German Economies at the Root of Unemployment? January 2002. Download (127 KB).
• CEPA Working Paper 2002-06. John Schmitt (Economic Policy Institute) and Jonathan Wadsworth (London School of Economics). "Is the OECD Jobs Strategy Behind US and British Employment and Unemployment Success in the 1990s?" Revised April 2002. Download (163 KB).
• CEPA Working Paper 2002-17. Dean Baker (Center for Economic and Policy Research), Andrew Glyn (Oxford University), David Howell (New School University), and John Schmitt (Economic Policy Institute). Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence. November 8, 2002. Download (434 KB).