Policy reform has reached the top of the political agenda in Europe with the Lisbon Agenda. A major theme in this programme of reform is how to make European labour markets more flexible. Our research is intended to clarify a number of important issues in that area. For example, is it more efficacious to reform the labour market from the demand or supply-side? In other words, which reforms are likely to have the biggest impact on equilibrium employment? What are the likely fiscal implications of such reforms? There is a concern that reforms may be costly, and that these may cause countries to breach fiscal guidelines. Might such a concern with fiscal prudence hamper labour market reform? What are the implications of countries sharing a common monetary policy, when their labour markets are rigid to differing degrees?
Researchers: Nikola Bokan, Andrew Hughes-Hallet and Charles Nolan
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