What are the Results of the Different Labor Market Policies in the United States and Europe?

This is not just an academic question for discussion in a textbook. In both the United States and Europe, labor market policy is frequently debated. The US Congress has considered various labor policies, such as restrictions on plant closing to protect jobs, requirements that firms offer workers health insurance, requirements that firms include paid sick days in employment contracts, and so on. At the same time, there is considerable discussion in Germany, France, and elsewhere in Europe about the possible benefits of increased labor market flexibility. Road Map Employment and unemployment are ideas that most of us are familiar with. You may well have already been employed, at least in a part-time capacity, at some point in your life. It is also possible that you have been unemployed, meaning that you were without a job, but were actively seeking work. Our personal experiences, and those of our parents and friends, help us understand the basics of employment and unemployment. Even if you have not yet been employed, you will begin searching for a job once you graduate with a college degree. As you surely know, finding a good job is not always easy. You want to find a job that you enjoy, fits your skills, and pays well. It is also not easy for prospective employers: they want to find someone who is suitably skilled, will work well within the firm, and is not too expensive. The challenge is to match workers and jobs: the worker needs to be suited to the job, and the job needs to be suited to the worker. The process of matching does not happen just once. As time passes, your skills, ambitions, and choice of occupation may change. As time passes, your employer’s needs change. You may wish to move to another city. Your employer may want to move your job to another city. Most people do not spend their entire lives in one job. A schematic representation of this process is shown in Figure 8.1 “Employment Transitions over Your Lifetime”. Here you leave college and look for a job. Finding that job is likely to be time-consuming. You will have to contact lots of prospective employers, read newspaper ads, use search engines on the Internet, and, of course, show up for interviews. In the end, you will find your first job and begin your career.

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