Flexibility and all that: understanding the EU Labour Market

Research output: Contribution to journalArticle

Abstract

The aim of this article is to explore the current European debate over labour market flexibility. First, it considers lessons from economic theory. The classical consensus considering unemployment to be purely voluntary, the Keynesian consensus introducing the concept of demand deficient involuntary unemployment and finally the neo‐classical consensus returning us to the classical viewpoint of the dominance of real conditions in the labour market. In order to proceed without confusion the article provides a clear working definition of the natural rate of unemployment and its three main components, voluntary unemployment, structural unemployment and involuntary unemployment. It then proceed to analyse each of these main components in detail, illustrating the difference between a free market approach and a European Commission approach to reducing each component of unemployment. The article concludes that the future is dependent on all EU citizens as electors of governments and holders of wages to moderate.
Original languageEnglish
Pages (from-to)170-188
Number of pages19
JournalEuropean Business Review
Volume99
Issue number3
Publication statusPublished - 1999

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Unemployment
Labour market
Involuntary unemployment
European Commission
Free market
Wages
Government
Natural rate of unemployment
Structural unemployment
Economic theory
Labour market flexibility

Cite this

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Flexibility and all that : understanding the EU Labour Market. / Potts, Nicholas.

In: European Business Review, Vol. 99, No. 3, 1999, p. 170-188.

Research output: Contribution to journalArticle

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