Hostname: page-component-848d4c4894-wg55d Total loading time: 0 Render date: 2024-04-30T12:53:26.977Z Has data issue: false hasContentIssue false
  • English
  • Français

The institutional roots of post-war European economic underperformance: a regional approach

Published online by Cambridge University Press:  11 March 2011

KERSTIN ENFLO
KERSTIN ENFLO*
Affiliation:
Lund University, kerstin.enflo@ekh.lu.se
Get access

Abstract

This article investigates which institutions and policies were related to the increase in European unemployment since 1970 and the productivity stagnation since the mid 1990s. By using data for 88 regions in nine European countries, national policies and institutions are analysed in a fixed-effects panel-data model to detect their relative importance after controlling for unobservable regional factors. The main finding is that institutions only started to matter after the oil crisis. The strongest institutional effects on employment came from the net reservation wages and employment protection laws. The institutional effects on productivity were mainly channelled through the employment productivity trade-off. By restricting the supply of labour, these effects were positive on productivity in the short run. However, the article shows that the long-run effects were negative and that there may be institutional roots to the European productivity slow-down in the 1990s.

Type
Research Article
Information
European Review of Economic History , Volume 15 , Issue 2 , August 2011 , pp. 329 - 355
Copyright
Copyright © European Historical Economics Society 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. and Shimer, R. (2000). Productivity gains from unemployment insurance. European Economic Review 44 (7), pp. 1195–1224.CrossRefGoogle Scholar
Alcaide, I. J. (2003). Evolución económica de las regiones y provincias españolas en el siglo XX. Bilbao: Fundación BBVA.Google Scholar
Alesina, A., Glaeser, E. and Scardote, B. (2006). Work and leisure in the United States and Europe: why so different? NBER Macroeconomics Annual 20, pp. 1–64.CrossRefGoogle Scholar
Allard, G. (2005a). Measuring job security over time: in search for a historical indicator for EPL (Employment Protection Legislation). Instituto de Empresa Working Paper 05-17.CrossRefGoogle Scholar
Allard, G. (2005b). Measuring the changing generosity of unemployment benefits: beyond existing indicators. Instituto de Empresa Working Paper 05-18.CrossRefGoogle Scholar
Allard, G. and Lindert, P. (2007). Euro-productivity and Euro-jobs since the 1960s: which institutions really mattered? In Hatton, T., O'Rourke, K. and Taylor, A. M. (eds.), The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson. Cambridge, MA: MIT Press 2007, pp. 365–94. Also available as NBER Working Paper 12460.CrossRefGoogle Scholar
Allen, S. K. (2004). The economics and politics of workers’ compensation: 1930–2000. PhD dissertation, University of Arizona.Google Scholar
Ark, B., van O'Mahony, M. and Timmer, M. (2009). The productivity gap between Europe and the United States: trends and causes. Journal of Economic Perspectives 22, pp. 25–44.CrossRefGoogle Scholar
Bassanini, A. and Duval, R. (2006). Employment patterns in OECD countries: reassessing the role of policies and institutions. OECD Economics Department Working Paper 486.Google Scholar
Blanchard, O. (2004). The economic future of Europe. Journal of Economic Perspectives 18 (4), pp. 3–26.CrossRefGoogle Scholar
Blanchard, O. and Wolfers, J. (2000). The role of shocks and institutions in the rise of European unemployment: the aggregate evidence. Economic Journal 110, p. 462.CrossRefGoogle Scholar
Boeri, T. (2008). Convergence via two-tier reforms and job-less growth creation in Europe. In Eichengreen, B., Landesman, M. and Stiefel, D. (eds.), The European Economy in an American Mirror. London: Routledge.Google Scholar
Bourles, R. and Cette, G. (2007). Trends in ‘structural’ productivity levels in the major industrialized countries. Economics Letters 95 (1), pp. 151–6.CrossRefGoogle Scholar
Calmfors, L. and Driffil, J. (1988). Bargaining structure, corporatism and macroeconomic performance. Economic Policy 3, pp. 13–61.CrossRefGoogle Scholar
Daveri, F. and Tabellini, G. (2000). Unemployment, growth and taxation in industrial countries. Economic Policy 30, pp. 47–88.Google Scholar
Dew-Becker, I. and Gordon, R. (2008). The role of labour market changes in the slow-down of European productivity growth. NBER Working Paper 13840.Google Scholar
Ederveen, S., de Groot, H. and Nahuis, R. (2006). Fertile soil for structural funds? A panel data analysis of the conditional effectiveness of European cohesion policy. Kyklos 59, pp. 17–42.CrossRefGoogle Scholar
Eichengreen, B. (1996). Institutions and economic growth: Europe after World War II. In Crafts, N. and Tonioli, G. (eds.), Economic Growth in Europe since 1945. Cambridge: Cambridge University Press.Google Scholar
Enflo, K. (2009). Productivity and employment – is there a trade-off? Comparing Western European regions and American states 1950–2000. Annals of Regional Science 45 (2), pp. 401–21.CrossRefGoogle Scholar
Fiori, G., Nicoletti, G.Scarpetta, S. and Schiantarelli, F. (2007). Employment outcomes and the interaction between product and labor market deregulation: are they substitutes or complements? IZA Discussion Papers 2770, Institute for the Study of Labor (IZA).CrossRefGoogle Scholar
Gordon, R. J. (1997). Is there a trade-off between unemployment and productivity growth? In Snower, D. and de la Dehesa, G. (eds.), Unemployment Policy: Government Options for the Labour Market. Cambridge: Cambridge University Press.Google Scholar
Gordon, R. J. (2004). Why was Europe left at the station when America's productivity locomotive departed? NBER Working Paper 10661.CrossRefGoogle Scholar
Gordon, R. J. (2008). Comparing welfare in Europe and the United States. In Eichengreen, B., Landesman, M. and Stiefel, D. (eds.), The European Economy in an American Mirror. London: Routledge.Google Scholar
Grubb, D. and Wells, W. (1993). Employment regulation and patterns of work in EC Countries. OECD Economic Studies 21, pp. 7–56.Google Scholar
Horst, A., Van Der Rojas-Ramagosa, H. and Bettendorf, L. (2009). Does employment affect productivity? CPB Discussion Paper 119.Google Scholar
Huberman, M. and Minns, C. (2007). ‘The times they are not changin’’: days and hours of work in Old and New Worlds, 1870–2000. Explorations in Economic History 44, pp. 538–67.CrossRefGoogle Scholar
Layard, R., Nickell, S. and Jackman, R. (1991). Unemployment: Macroeconomic Performance and the Labour Market. Oxford: Oxford University Press.Google Scholar
Lazear, E. P. (1990). Job security provisions and employment. Quarterly Journal of Economics 105, pp. 699–726.CrossRefGoogle Scholar
Lindert, P. (2004). Growing Public: Social Spending and Economic Growth since the Eighteenth Century Cambridge. Cambridge: Cambridge University Press.Google Scholar
Molle, W., van Holst, B. and Smit, H. (1980). Regional Disparity and Economic Development in the European Community, Cambridge: Cambridge University Press.Google Scholar
Nickell, S. (1997). Unemployment and labour market rigidities: Europe versus North America. The Journal of Economic Perspectives 11, pp. 55–74.CrossRefGoogle Scholar
Nicoletti, G. and Scarpetta, S. (2003). Regulation, productivity and growth: OECD evidence. Economic Policy 18 (36), pp. 9–72.CrossRefGoogle Scholar
Ochel, W. (2000). Collective bargaining (centralization/coordination). Mimeo. Munich: Ifo Institute.Google Scholar
OECD (1994). The OECD Jobs Study: Facts, Analyses, Strategies. Paris: OECD.Google Scholar
Olson, M. (1982). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.Google Scholar
Prescott, E. (2004). Why do Americans work so much more than Europeans? Federal Reserve Bank of Minneapolis Quarterly Review 28, pp. 2–15.Google Scholar
Rogerson, R. (2006). Comment to Alesina et al., ‘Work and leisure in the United States: why so different?’ NBER Macro Economics Annual 2005 20, pp. 79–95.CrossRefGoogle Scholar