National labor market institutions and the EU integration process

This paper outlines theoretical insights regarding the motivation and effects of labor market institutions, and reviews empirical studies of relevant evidence from European and other countries’ historical experience. Institutional interference with laissez faire labor market outcomes has both economic and distributional implications, which depend on the structure of markets and on the details of policy implementation. The resulting conceptual framework is brought to bear on a discussion of possible reforms of European labor markets in the context of the Economic and Monetary Union process.