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This chapter examines labour market regulation in Italy. It highlights the risks associated with excessive regulation of employment relations: the development of a highly segmented market, exclusion of first-time job seekers from regular employment, low elasticity of wages to unemployment, inefficiencies from low inter-regional and inter-sectoral labour mobility, and the presence of a large underground economy. ‘Re-regulation’ in the early 1990s has improved flexibility in wage dynamics, working time, firing procedures, and atypical work.

This chapter examines the impact of labour market regulation in Europe. It shows that regulation slows down flows out of unemployment, and contributes to the unemployment problem among young and low-skilled workers. Other than these, there is no consistent nor convincing evidence on the relationship between employment protection and unemployment in quantitative literature.

The very generous, service‐oriented ‘social–democratic’ welfare states in Sweden and Denmark did consistently achieve higher levels of overall employment, extremely high levels of public services, greater equality in wages, and higher rates of female employment than either the ‘liberal’ or the ‘Bismarckian’ welfare states covered in this study. Following the liberalization of capital markets and errors of fiscal and monetary policy at the end of the 1980s, however, the Swedish economy went from an overheated boom into a deep recession, which then required significant cutbacks of social spending and public‐sector employment in the 1990s. By contrast, Denmark combined growth‐oriented macroeconomic policies with more flexible labour‐market regulations that allowed it to maintain the high level of public services while also increasing employment in private services. With the rapid recovery of the Swedish economy at the end of the 1990s, both countries are again successful in combining high competitiveness in the international economy with very high levels of social protection.

The macroscopic changes to post‐industrial employment that were examined in the previous chapter are unlikely to affect all nations similarly. Job loss through de‐industrialization, e.g., will be more massive where existing industries are uncompetitive (as in Britain or Spain) and less devastating elsewhere—perhaps because firms are more adaptable (as in much of Danish, Italian, or German industry), but possibly also because wage costs decline (as in the US). De‐industrialization may or may not cause heavy unemployment, depending on skill and production structure, and also on how labour markets are managed; most of Europe has,e.g., transformed mass lay‐offs into early retirement. Similar root causes of post‐industrial employment will, therefore, have radically divergent outcomes—there is no such thing as one post‐industrial model because the institutional make‐up of nations differs, and so also does their choice of how to manage change. The different sections of this chapter are: Industrial Relations; Labour Market Regulation; The Dilemmas of Flexibilization; The Welfare State and the Reservation Wage; Wage Regulation; Employment Protection; The Regulatory Infrastructure and the Management of Industrial Decline; Managing the Equality—Jobs Trade‐Off; The Hump‐Shaped Curve—a quadratic measure of labour market rigidities; and National Idiosyncrasies and Welfare Regimes.

This chapter examines labour market regulation in Germany. It argues that there is no clear evidence to support claims that labour laws reduced the flexibility of the labour market. Although deregulation did not yield positive employment effects, neither did it have the destructive effects claimed by opponents. The relaxation of requirements for fixed-term contracts neither boosted employment nor destroyed social cohesion.

This chapter examines the impact of the Spanish government’s introduction of ‘flexibility at the margin’ on employment and unemployment. This change affected the economy’s capacity to create jobs. It facilitated the creation of a wider dual labour market with a primary sector in which workers enjoyed significant stability, and a secondary sector in which employment stability is lacking.

Scrutinizes the notion that patterns of school-to-work transitions in Europe can be characterized by a dichotomy between an occupational labour market (OLM) model, where entry jobs are closely linked to young people’s specialized vocational training, and an internal labour market (ILM) model that results from a more significant role of labour market experience and seniority in matching processes. Empirically, the country clustering conforms to the OLM–ILM dichotomy insofar as entry patterns in Continental Europe with extensive vocational training systems differ from those of Northern European countries lacking such systems. Southern European countries differ systematically from both patterns, however, and indicate that transition patterns are not determined by the structure of training systems alone but result from the interaction of educational systems and labour market institutions.

This chapter presents a synthesis of the findings in this volume on the deregulation of labour markets in Europe. It argues that Europe is not homogeneous, that regulation affects structure and not employment, and that regulation and flexibility have complex and contradictory effects. It discusses policy implications and cites two targets of reform. These are collective bargaining practice and the interaction of formal education and work-related training.

This chapter explores the question of what an effective rationale might be for the present state of labour market regulation, and for its future development. The chapter is organized as follows. Section 2 considers the nature of competition in the labour market and its relationship to the constitutive role played by legal institutions in shaping the market order. Section 3 outlines the nature of the capability-based approach to labour market regulation and the link to reflexive law and social rights. Section 4 looks at the number of concrete instances in which new solutions to the issues of labour market regulation could be said to be emerging. Section 5 concludes by arguing for a particular conception of ‘labour market law’, one in which social rights play a central, constitutive role in the formation of labour market relations.

This chapter explores legal and economic debates on labour market regulation and the proper role for the law in governing markets, in particular, focusing on the question ‘where the boundary line should be drawn’ between government regulation and market action. New institutionalist analysis is employed as a means to evaluate the traditional economic suspicion of labour market regulation, which equates labour market institutions with high unemployment. This critique is fundamental to the discussion of theories of unemployment and the philosophies behind the European Union policy on combating unemployment and creating employment. While it is important to highlight the efficiency-enhancing attributes of certain institutions in the context of the ongoing discourse on labour market, the chapter concludes that reasons of political economy and the desire to retain social cohesion will mean that efficiency cannot be the only goal.

Looks at some of the labour market outcomes of recent economic reforms. The extent to which labour market institutions affect the relationship between reform policies and income inequality remains controversial. Some see labour market institutions as a hindrance to more efficient development and growth, while others argue that without proper labour market institutions an economy cannot progress. Labour market policies, regulations, and institutions have at least three goals: improving allocative efficiency (matching supply and demand); improving dynamic efficiency (increasing the quality of the labour force); and improving or maintaining a sense of equity and social justice among labour force participants. These different goals inform the discussion throughout the chapter, which is organized as follows: after an introduction, the second section touches briefly on some theoretical aspects of labour markets and reform policies; the third reviews trends in labour market changes in terms of informalization of employment, wage shares in national income, and wage inequality; the fourth reviews some general trends in labour market policies that have typically been implemented under the Washington Consensus, namely, a decline in minimum wages, shifts in the bargaining power of unions, and a reduction in employment protection; the final section offers conclusions on whether or not labour market policies reduce income inequality.

This chapter re-states the case for a broader interpretation of the traditional subject matter and purpose of labour law based on a labour market perspective of the subject, and seeks to locate industrial policies such as tariff protection, industry assistance and other economic development initiatives within that broader perspective. The chapter uses the example of the implementation of the New Protection during the early beginnings of federal labour regulation in Australia to explore both the historical contingency of traditional labour law and to illustrate the importance of industrial policy settings to the subject matter and goals of traditional labour law in both industrialised and developing country contexts. The chapter also considers the advantages of including industrial policy within the idea of labour law to both scholarship and labour policymaking and practice.

This chapter describes the regulatory framework in Greece at the time of the crisis and the way it has evolved since. It then reviews the theoretical and empirical literature relating to labor market regulation as a way to understand how the institutions in Greece may have affected the performance of the economy. Finally, it offers an alternative vision of a deregulated labor market supported by a robust system of welfare and social insurance, which achieves better protection and is more conducive to entrepreneurship.

The challenge for policymakers is to design a regulatory system that minimizes the additional labor (i.e., adjustment) costs to employers while protecting the socioeconomic welfare of workers in the labor market. By minimizing such labor costs, employers would be in a better position to hire more workers given other favorable economic conditions. This chapter outlines the institutional framework governing the operation of the labor market. The nonwage cost implications of this framework are then examined. An attempt is made to develop indexes of labor market regulation based on the various provisions in labor regulation and, to a lesser extent, in collective bargaining agreements. The incorporation of nonwage labor costs into the labor demand function is also examined. The statistical data used in the estimation process are examined, too, while the empirical results are also presented. The possible policy implications of the research are given in a closing section.

This chapter builds a model in which labour market regulations influence labour productivity growth through labour markets. The model decomposes labour productivity growth into components attributable to (i) changes in efficiency; (ii) technological change; (iii) physical capital deepening; (iv) human capital accumulation; (v) labour market regulations changes. The empirical analysis Penn World Tables and Economic Freedom of the World data is performed for 1970–95 and 1995–2014. Findings can be summarized as follows. First, physical capital deepening is the major driving force behind productivity growth over the period. Labour market regulation changes having contributed next to nothing during 1970–95, become the second most important force of economic growth after 1995. Second, relatively rich nations benefit more from changes to labour market regulations than do relatively poor nations. Finally, contributions from labour market regulations changes to growth is stronger for countries with less liberalized labour markets.

In addition to the conventional emphasis on labour law's function in distributing power between labour and capital, labour law is argued to influence the distribution of rents, power, rights, resources and economic risks between workers as well. Recognizing that labour law has multiple distributive implications downgrades the centrality of the labour-capital cleavage in accounting for the social and economic organization of society and in intra-firm interactions. It throws light on another dimension that can explain preferences and norms and be used to draw attention to possible normative tradeoffs. This observation resonates with a critical analysis of labour law’s outcomes, but does not merit criticism of labour market institutions and regulatory intervention, as the distributive implications are innate to the functioning of the labour market. The chapter demonstrates the intra-labour distributive implications in collective bargaining, employment discrimination, and regulatory interventions in the labour market.