Some Thoughts on Macroeconomic Fluctuations and the Timing of Labor Market Reform

14 Pages Posted: 6 Nov 2002

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: October 2002

Abstract

In this paper, I analyze the pros and cons of implementing structural reforms of the labor market in booms vs. recessions, in light of considerations of social efficiency, political viability, and macroeconomic fine tuning. While the optimal timing of a reform depends on the relative importance of several conflicting effects, it seems clear that a reform should be accompanied by an expansionary macroeconomic policy. This makes structural reform more problematic in the context of the European Monetary Union.

Keywords: Labour Market Reforms, Unemployment, Employment Protection, Monetary Union, Firing Costs, Political Economy

JEL Classification: E32, E52, E61, J6, K31

Suggested Citation

Saint-Paul, Gilles, Some Thoughts on Macroeconomic Fluctuations and the Timing of Labor Market Reform (October 2002). IZA Discussion Paper No. 611. Available at SSRN: https://ssrn.com/abstract=343885

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
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+33 5 6112 8544 (Phone)
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

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

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