Product Market Reforms and Unemployment in Europe

41 Pages Posted: 18 Apr 2001

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Achim Schniewind

University of Heidelberg - Alfred Weber Institute for Economics

Date Written: February 2001

Abstract

In this paper we study how promoting product market competition by reducing mark-ups or by increasing productivity are able to complement labor market reforms. We use a simple general equilibrium model with different types of labor. The bottom-line of the paper is that product market reforms will help to reduce aggregate unemployment under many circumstances even though sectoral unemployment may increase. We also highlight that the mobility of high-skilled workers and the distribution of unemployment across sectors determine whether productivity improvements in one sector affect aggregate unemployment positively or negatively.

Keywords: Product market competition, unemployment, mobility of labor force, political support for reforms

JEL Classification: D58, E24, J60, L13

Suggested Citation

Gersbach, Hans and Schniewind, Achim, Product Market Reforms and Unemployment in Europe (February 2001). IZA Discussion Paper No. 255. Available at SSRN: https://ssrn.com/abstract=265634

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Achim Schniewind

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
284
Abstract Views
3,404
rank
107,040
PlumX Metrics