Why Does Employment Differ in the Course of Time and Across Nations? An Institutional Answer In The Light of the ‘Regulation’ Theory

The paper argues that contemporary unemployment is related not so much to the short run malfunctioning of the labor market as to the erosion of the growth regime in the post‐war period. What most theories attribute to increasing labor market rigidities is in fact closely related to the mismatch between the national institutional forms and the trends associated with a new production paradigm and the transformation of the international regime. Some long run historical analyses inspired by the “regulation” theory are then used in order to interpret the unprecedented pattern of French unemployment. Similarly contemporary international comparisons help to explain why employment performances differ so much in North America, Japan, Continental Europe and Scandinavian countries. Some general objectives for economic policy are then suggested but the general conclusion stresses the obstacles to the transition from one growth regime to another which arise from institutional inertia and complementarity.