Paper #343

Title:

The political consequences of unemployment

Author:

Gilles Saint Paul

Date:

November 1998

Abstract:

We analyze the channels by which an ill-functioning labor market changes the preferences of the people for public policy and therefore the decisions that are made. We not only discuss labour market reform but other important aspects of policy making such as the size and structure of government spending. The class of mechanisms that we highlight can be summarized as the very existence of unemployment generating political support for "sclerosis". This may help to explain the timid pace of reform, in particular the fact that any recovery sends them at the backfront of the political agenda, and the sometimes violent opposition generated by some measures, as we have seen mostly in France.

Keywords:

Unemployment, rigidities, employment protection, political economy, european labour markets

JEL codes:

E6, E24, J3, J6

Area of Research:

Macroeconomics and International Economics

Published in:

Swedish Economic Policy Review, 5, 2, 1998, pp. 259-296

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