Labor Market Policy: A Comparative View on the Costs and Benefits of Labor Market Flexibility

39 Pages Posted: 4 Aug 2010

See all articles by Lawrence M. Kahn

Lawrence M. Kahn

Cornell University - School of Industrial and Labor Relations; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

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Date Written: July 30, 2010

Abstract

I review theories and evidence on labor market policies and institutions in an international context. These include collective bargaining, minimum wages, employment protection laws, unemployment insurance (UI), mandated parental leave, and active labor market policies. Scandinavia and Central Europe follow more interventionist policies than Canada, the UK and the US. Vulnerability to external market forces and ethnic homogeneity may explain such differences. While the interventionist model appears to reduce wage inequality and raise job security for incumbent workers, it also often relegates new entrants (disproportionately women, youth and immigrants) and the less skilled to temporary jobs or unemployment.

Keywords: labor, market, flexibility

JEL Classification: J08, J68

Suggested Citation

Kahn, Lawrence M., Labor Market Policy: A Comparative View on the Costs and Benefits of Labor Market Flexibility (July 30, 2010). CESifo Working Paper Series No. 3140. Available at SSRN: https://ssrn.com/abstract=1652672

Lawrence M. Kahn (Contact Author)

Cornell University - School of Industrial and Labor Relations ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Germany

IZA Institute of Labor Economics

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Germany

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