Labour Market Structural Reforms: Some Lessons from the Recent Studies (Réformes Structurelles Sur Le Marché du Travail: Quels Enseignements Peut-on Tirer Des Études Existantes) (French)

54 Pages Posted: 26 Oct 2010

See all articles by Denis Fougère

Denis Fougère

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

Date Written: August 1, 2006

Abstract

In general, empirical studies having evaluated with firm individual data the effects of structural labour market reforms in European countries do not reach unambiguous conclusions. In particular, they find that reforms increasing incentives to lower the number of temporary labour contracts do not induce firms to change their long-term labour demand level. Thus, such reforms are not sufficient by themselves to reduce the unemployment rate and to stimulate production and productivity. Fiscal incentives offering income tax credits to households in which a person who was previously not employed find a job, tend to increase labour supply. However, their effectiveness is often limited by the disincentive effects of other transfer policies. In general, structural labour markets reforms cannot succeed when their potential effects are neutralized by inappropriate wage increases. It is thus important to examine the institutional context which determines the wage bargaining process. Several contributions show that, on one side, a higher coordination in the bargaining process could increase labour market flexibility and reduce labour cost, while, on the other side, an excessive decentralisation of the bargaining process could increase the variance of labour contracts. Thus determining the bargaining level which maximizes the efficiency of monetary policy is a crucial issue for any central bank.

Note: Downloadable document is in French.

Keywords: Labour Market, Structural Reforms, Wage Bargaining, Coordination, Decentralisation, Monetary Policy

JEL Classification: E24, E50, J21, J31, J41

Suggested Citation

Fougere, Denis, Labour Market Structural Reforms: Some Lessons from the Recent Studies (Réformes Structurelles Sur Le Marché du Travail: Quels Enseignements Peut-on Tirer Des Études Existantes) (French) (August 1, 2006). Banque de France Working Paper No. NER-E 152, Available at SSRN: https://ssrn.com/abstract=1698142 or http://dx.doi.org/10.2139/ssrn.1698142

Denis Fougere (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

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National Center for Scientific Research (CNRS)

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IZA Institute of Labor Economics

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