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Labor market policy

A comparative view on the costs and benefits of labor market flexibility

Bibliographic Data

ID11680574
AuthorsLawrence M Kahn (0000-0001-5291-4304, Cornell University, corresponding author)
Year2011
Volume31
Issue1
Pages94-110
Publication date2011-07-13
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Policy Analysis and Management (JOURNAL)
Journal identifiersISSN: 0276-8739 • E-ISSN: 1520-6688
PublisherWiley (PUBLISHER • GB)
DOI10.1002/pam.20602
OpenAlexW3122295018
LanguageEN
Citations received22
References cited66

I review theories and evidence on wage‐setting institutions and labor market policies in an international comparative context. These include collective bargaining, minimum wages, employment protection laws, unemployment insurance (UI), mandated parental leave, and active labor market policies (ALMPs). Since it is unlikely that an unregulated private sector would provide the income insurance these institutions do, these policies may enhance economic efficiency. However, to the extent that unemployment or resource misallocation results from such measures, these efficiency gains may be offset. Overall, Scandinavia and Central Europe follow distinctively more interventionist policies than the English‐speaking countries in the Northern Hemisphere. Possible explanations for such differences include vulnerability to external market forces and ethnic homogeneity. I then review evidence on the impacts of these policies and institutions. While the interventionist model appears to cause lower levels of wage inequality and high levels of job security to incumbent workers, it also in some cases leads to the relegation of new entrants (disproportionately women, youth, and immigrants) as well as the less skilled to temporary jobs or unemployment. Making labor markets more flexible could bring these groups into the regular labor market to a greater extent, at the expense of higher levels of economic insecurity for incumbents and higher levels of wage inequality. © 2011 by the Association for Public Policy Analysis and Management

Collective bargaining · Economic growth · Economics · Job security · Labour economics · Unemployment · Wage · Work (physics · Employment and Welfare Studies · Labor market dynamics and wage inequality · Social Policy and Reform Studies

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Unique citing works22
Citations per year1,57
Citation span2012 - 2026 (15)
Citation velocitycurrent
Highly citedNo
Citation typesNeutral: 22
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