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Fall 2004

ISSN 0890-913X

Volume 20, Number 1

Categories: Fall 2004 | Labor Force

European Labor Markets and Structural Reform : Does the Euro Have a Future?

John C. Soper, John Carroll University

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EuropeanLaborMarketsandStructuralReform:DoestheEuroHaveaFuture?JohnC.SoperJohnCarrollUniversityThebriefhistoryofEconomicandMonetaryUnion(EMU)inEurope,andtheconcomitantbirthoftheeuroasthenewsinglecurrency,hasprovidedEuropeanswithsomemomentsofcheerinrecentmonths.Theeurohasclimbedtonewheightsagainstthedollarandseveralothermajorcurrencies.ButtheapparentAsuccess@oftheeurohasexposedsomeothermajorconcernsforthefutureofEMU,andindeedforthefutureoftheEuropeanUnion.HighonthelistoftheseconcernsistheglaringlackofflexibilityinEuropeanlabormarketsandtheexceptionallyhighnaturalrateofunemploymentinmostContinentallabormarkets.EmbeddedinthissetofissuesareconcernsaboutAinstitutions,culture,andethicsinamarketeconomy,@thethemeofthe2004programoftheAssociationofPrivateEnterpriseEducation.ThestateofEuropeanlabormarketsTherecanbelittledoubtthatEuropesuffersfrompersistentlyhighunemployment.Sincethemid-1980s,Europe=snaturalrateofunemploymenthasdivergedfromthatoftheUnitedStatestothepointwhereitapproximatelydoublestheU.S.rateonaverage.Whataretheavailableexplanationsforthisdivergence?PerhapsthemoststraightforwardexplanationofEurope=shighnaturalrateofunemploymentistheexistenceofasetofrestrictivelegalandinstitutionalconstraintsthatdriveuptherealwage.ExamplesofsuchconstraintsaboundinEurope:highminimum-wagelaws,centralizedwage-setting,requirementsforextendednotificationpriortoworkerdismissalorplantclosure(morethan11monthsinItaly),generousfamilyleavepolicies,andextensionofunionwagestolargenumbersofnon-unionemployees(upto90%inFrance).Theresultoftheseandotherrestrictionsonlabor-marketflexibilityisprevailingwageswellabovethemarket-

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Metadata [hide]

Title	European Labor Markets and Structural Reform : Does the Euro Have a Future?
Authors/Creators:	John C. Soper, John Carroll University
Year:	2004
Volume:	20
Number:	1
Pages:	112 - 124
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Labour market, Unemployment, Bureaucracy, Monetary policy, Money, Monetary areas, Currencies, Central banks

Citation:
Soper, John C. / 2004. "European Labor Markets and Structural Reform : Does the Euro Have a Future?." The Journal of Private Enterprise, 20(1): 112-124.