Date Added: Oct 2010
European labor markets have undergone several important innovations over the last three decades. Most countries have reformed their labor markets since the mid-1990s, with the liberalization of fixed-term contracts and temporary work agencies being the common elements to such reforms. This paper investigates the existence of a change in the dynamic behavior of the aggregate employment for major European Union countries - France, Germany, Italy, and Spain. According to the results, partial labor market reforms have made the response of the aggregate employment to output shocks larger and quite comparable to that found for the UK - the most flexible labor market in Europe since the Thatcher reforms.