Institutions And Performance In European Labour Markets: Taking A Fresh Look At Evidence

This paper presents a selective survey of the recent literature on labor market institutions and offers new empirical EU-based evidence on the impact of labor market reforms on employment and labor market adjustment. While the literature traditionally treats labor market institutions as exogenous, attention shifted recently towards understanding the underlying causes of specific institutional arrangements. As a consequence, the literature highlights the great importance of an efficient policy design exploiting these interactions wisely and identifies general principles for achieving an efficient policy design at both macro and micro levels.