Working Paper: CEPR ID: DP329
Authors: Assar Lindbeck; Dennis J. Snower
Abstract: The paper analyzes a variety of government policies that can stimulate employment when unemployment is generated through the conflicting of interest between insiders and outsiders. It also provides guidelines for identifying policies that may be ineffective. We show how supply side policies can stimulate employment by raising worker productivity or reducing labor costs. Our analysis indicates that when wages and prices are flexible, product demand policies have no significant effect on employment unless these policies stimulate labor productivity, the entry of firms, capital utilization or investment.
Keywords: government policy; unemployment; wage formation; employment; insider-outsider conflict
JEL Codes: 023; 026; 131; 821; 831; 832
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government policies (H59) | employment outcomes (J68) |
| macroeconomic policies (E60) | employment (J68) |
| wage-setting processes (J38) | employment (J68) |
| labor demand relations (J23) | employment (J68) |
| supply-side policies (E65) | employment (J68) |
| supply-side policies (E65) | worker productivity (J29) |
| supply-side policies (E65) | labor costs (J30) |
| demand-side policies (J68) | employment (J68) |
| demand-side policies (J68) | labor productivity (J24) |
| demand-side policies (J68) | firm entry and exit dynamics (L26) |
| demand-side policies (J68) | infrastructure development (H54) |