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Abstract:
This paper discusses the reasons for the dismal labor market performance of Germany over the last three decades along with potential remedies. It argues that labor market rigidities along with a generous welfare state in conjunction with certain changes in the economic environment are important in explaining this development but cannot solely account for it. Barriers to entrepreneurship, to setting up new firms and to innovations which are prevalent on goods and capital markets also play an important role in explaining the lackluster German economic performance of which rising unemployment is only one part. Comprehensive institutional reforms are therefore called for.

Unemployment, Germany, Labor Market Reforms, Venture Capital, Innovations

Abstract:
Labor market performance has differed considerably between OECD countries over the last two decades. The focus of the literature so far has been to ask whether these differences can be explained by varying degrees of labor market rigidities and generosity of welfare states. This paper takes a different perspective and analyzes whether differences in venture capital investments have explanatory power with respect to labor market performance across countries and over time. In particular, the Anglo-Saxon countries have been relatively successful over the last two decades in producing employment growth and in reducing unemployment compared to most continental European OECD countries. As a rule they have also been and are still ahead in developing thriving venture capital markets that are often deemed crucial for the creation of new firms and for successfully managing the ongoing radical structural change away from traditional industrial production toward the so-called "new economy".

Labor Markets, Venture Capital, Unemployment, New Economy, Panel Analysis

Abstract:
Anglo-Saxon countries have been successful in the 1990s concerning labor market performance compared to the former role models Germany and Japan. This reversal in relative economic performance might be related to idiosyncrasies in financial markets, with bank-based financial markets as in Germany and Japan being possibly inferior to stockmarket-based financial markets in turbulent times and when approaching the economic frontier. A cleavage is related to venture capital markets which are flourishing on Anglo-Saxon but not on German type financial markets. Venture capital is crucial for financing structural change, new firms and innovations and therefore possibly also nowadays for employment growth.

Labor Markets, Venture Capital, Unemployment, New Economy, Panel Data Analysis

Abstract:
This paper analyses the influence of the capital market on the labour market. Especially the impact of start-up financing on the structure of unemployment is of interest. We use a cross-country panel data analysis to examine how venture capital investment influences disaggregate unemployment. As we expected, venture capital investment has different influences on sectoral-, educational- and occupational-specific unemployment. We suggest, on the basis of the regression results, that venture capital investment is a catalyst of structural change and has contributed to the faster growing internet and new economy sector in countries like the U.S. that have a well-developed venture capital market.

Labor Markets, Venture Capital, Employment, New Economy, Panel Analysis

Abstract:
This paper analyzes whether differences in institutional structures on capital markets contribute to explaining why some OECD-countries, in particular the Anglo-Saxon countries, have been much more successful over the last two decades in producing employment growth and in reducing unemployment than most continental-European OECD-countries. It is argued that the often-blamed labor market rigidities alone, while important, do not provide a satisfactory explanation for these differences across countries and over time. Financial constraints are potentially important obstacles against creating new firms and jobs and thus against coping well with structural change and against moving successfully toward the "new economy". Highly developed venture capital markets should help to alleviate such financial constraints. This view that labor-market institutions should be supplemented by capital market imperfections for explaining differences in employment performances is supported by our panel data analysis, in which venture capital turns out to be a significant institutional variable.

Labor Markets, Unemployment, New Economy, Panel Analysis, Venture Capital

Abstract:
This paper presents a positive model which shows that institutional setups on capital and labor markets might be intertwined by politicoeconomic forces. Some countries especially in continental Europe exhibit a corporatist politicoeconomic equilibrium with a substantial protection of insiders on both markets. The more important money is in political decision-making, the more divided the workforce is, and the more globalized capital markets are, the more likely is a capitalist politicoeconomic equilibrium with little employment and substantial investor protection. Our prediction of a negative cross-country relationship between labor market rigidities and of competition on capital markets receives considerable empirical support.

Labor Markets, Employment Protection, Corporatism, Corporate Governance, Shareholder Protection, Political Economy

Abstract:
EMU started with eleven member countries as scheduled on January 1, 1999. The paper shows that the primacy of politics over economics in this decision could have serious consequences concerning the stability of EMU in the transition phase. Speculative attacks against currencies which are in economic distress due to asymmetric shocks can still happen. A speculative attack as such cannot force a country out of EMU. However, the country concerned might voluntarily decide to leave the system as the costs of staying inside EMU, e.g., due to further rising unemployment, become too large to bear.

European Monetary Union, real wage rigidity, fiscal policy, unemployment, labor market reforms, monetary policy, asymmetric shocks

Abstract:
Labor market performance tends to vary across countries and over time.These variances are investigated in regard to venture capital (VC) support provided within these countries to assist the creation of new business and job opportunities.When comparing the VC market of the United States to that of some European countries, the U.S. market has been much more successful in creating and maintaining a venture capital market. Upon comparison, both the United States and Europe differ in the total level of VC investments and in the structure of the investments.While many European markets utilize banks for VC backing and focus on manufacturing and consumer industry, the United States uses private VC support and focuses on computer, telecommunications, and biomedical industries. Following a brief overview of theoretical considerations of successful VC markets, the empirical data of the analysis are presented.Panel data from twenty Organization of Economic Cooperation and Development (OECD) countries from the period 1986 to 1999 are analyzed via several formulas.The variables are discussed, and the results indicate VC investment does improve labor market performance by reducing unemployment and increasing employment.The long-term effects and areas for future research are considered, as are the limitations of the findings. (AKP)

Organisation for Economic Co-operation & Development (OECD), Venture capital, Job creation, Macroeconomics, Venture capital markets, Private investments, Public investments, Labor markets, Employment rates, Firm performance, Labor economics

Abstract:
The literature on unemployment has mostly focused on labor market issues while the impact of capital formation is largely neglected. Job creation is often thought to be a matter of encouraging more employment on a given capital stock. In contrast, this paper explicitly deals with the long-run consequences of institutional shocks on capital formation and employment. It is shown that the usual tradeoff between employment and wages disappears in the long run. In line with an appropriation model, the estimated values for the long-run elasticities of substitution between capital and labor for Germany and France are substantially greater than one.