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During more than three decades of protracted high unemployment, European countries have developed a variety of approaches in order to tackle the problem. These strategies differ in their philosophy, scopes and successes. A number of them can be understood in terms of shying away from full-fledged liberalization in order to preserve the "European Social Model". In this paper the author discusses their relative merits. He focuses on strategies that may reasonably be expected to reduce unemployment, and ignores sheer blunders based on a false view of how the economics works (such as working time reduction), as well as measures that may improve the welfare of the unemployed but are nevertheless harmful to the labour market (such as generous unemployment benefits). The general message is that some of the strategies that “preserve the European Social Model” have merits, but are unlikely to lead to an efficient labour market where finding a job or hiring a worker are no longer considered as a painful challenge.
Gilles Saint-Paul obtained his Ph.D. from MIT in 1990. Since then he has worked on issues related to unemployment, long-term economic growth, political economy and European labour market institutions. He has published extensively on these issues, in particular "Dual Labor Markets: A macroeconomic perspective" (MIT Press, 1996) and "The Political Economy of Labour Market Institutions" (Oxford University Press, 2000). His recent work has dealt with the implications of new technologies and intellectual property rights for growth, and the dynamics of income distribution. He has been Professor of Economics at DELTA in Paris from 1990 to 1997, and at Universitat Pompeu Fabra in Barcelona from 1997 to 2000. Since then he is a Professor at Toulouse University and a Visiting Professor at Birkbeck College, London. In 2007 he was awarded the Yrjo Jahnsson medal which distinguishes the best European economist under 45 every two years. He has served as a consultant for the IMF, the Spanish government, and the Swedish government. He is a member of the Conseil d’Analyse Economique, an advisory council to the French Prime Minister, and is Programme Director of the Centre for Economic Policy Research in London in the area of Labour Economics.
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