Labour Supply and Incentives to Work in Europe

Labour Supply and Incentives to Work in Europe

Edited by Ramón Gómez-Salvador, Ana Lamo, Barbara Petrongolo, Melanie Ward and Etienne Wasmer

Labour Supply and Incentives to Work in Europe highlights recent developments in the labour supply in Europe and gives a detailed assessment of their link with economic policies and labour market institutions. Despite major changes in European labour supply during the past few decades, the existing literature still lacks a comprehensive study of the relationship between labour supply and labour market institutions from a macro perspective.


Juan J. Dolado

Subjects: economics and finance, labour economics


Juan J. Dolado Introduction With an aggregate employment rate of 64.7 per cent in 2003 the European Union (EU) still has some ground to cover in order to achieve the 70 per cent Lisbon Summit target for 2010. The gap is even larger in comparison to the current 72 per cent employment rate in the USA. Over the last halfdecade the employment rate increased by 2 percentage points but the rate of growth has slowed down to less than 0.5 percentage points since the turn of the century. It is therefore not surprising that European public opinion (for example through the Eurobarometer) consistently places ‘increasing employment rates’ at the top of policy priorities. Under these circumstances it seems reasonable to expect that the EU’s success or failure in achieving such a goal will depend to a large extent on whether the functioning of European labour markets in the past can be substantially improved upon in the future. A return to the negative performance of the early 1990s, when employment rates got stacked around 60 per cent, would mean a serious threat to the success of the new EU. The difficulties may be even more serious when one takes into account that the new Member States (with employment rates in the range of 50–55 per cent, except in the Czech Republic) fare worse than the EU-15 in this dimension. When thinking about labour markets (LM) in the future, a useful starting point is to recognize that LM regulations are...

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