Evaluating Unemployment Policies: What Do the Underlying Theories Tell Us?

January 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper surveys unemployment policies for advanced market economies and evaluates them by examining the predictions of the underlying macroeconomic theories. The basic idea is that, for the most part, different unemployment policy prescriptions rest; on different macroeconomic theories, and our confidence in the prescriptions least in part--on the theories’ ability to predict some salient stylized facts about unemployment behavior. The paper considers four types, of policies laissez faire, demand-management supply-side; and structural policies.

Subject: Employment, Labor, Labor costs, Unemployment, Wages

Keywords: cost of capital, demand management, Employment, entered firm, equilibrium unemployment, Europe, insider-outsider theory, Labor costs, marginal product of labor, monitoring capability, nominal wage, profit sharing, take-home pay, Unemployment, unemployment insurance, wage contract, wage-price sluggishness, Wages, WP

Pages:
44
Volume:
1995
DOI:
https://doi.org/10.5089/9781451842388.001
Issue:
007
Series:
Working Paper No. 1995/007
Stock No:
WPIEA0071995
ISBN:
9781451842388
ISSN:
1018-5941

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