Economic Integration and Labor Market Institutions

Julien Prat

Differences in labor market regulations shape the comparative advantages of countries. For example, a policy question of considerable interest is whether labor market reform in one country helps or harms its trading partners. The issue is particularly relevant for Europe since the process of integration has led to the emergence of a common market linking countries with very different labor market institutions. In particular, there has been some debate about German Hartz IV reforms and the presumption that it may have led to higher unemployment in Germany's trading partners. More generally, can a common good market with heterogenous labor markets function smoothly or should trade integration be followed by an harmonization of labor practices and legislations? Then what should be the optimal way to harmonize regulations so as to avoid a race to the bottom when countries seek to boost their competitiveness by lowering their safety nets?

État du colloque : terminé