This paper starts from the observation that despite their very high levels of unemployment, major European countries … have devoted few resources to reducing it. This suggests that there is little political concern about high unemployment. I …

institutions and show that the results are consistent with this view. Among other things, we find: that higher exposure of the … employed to unemployment facilitates a reduction in the level of employment protection; that unemployment benefits are lower …, the more employment reacts to wages; and that a higher level of unemployment and a right-wing government slow down the …

We develop a general equilibrium analysis of the impact of active labour market policy on unemployment, wages and the … employed have little exposure to unemployment and if the demand for unskilled labour is inelastic, there may be political … support for policies which actually raise the equilibrium level of total unemployment. …

equilibrium, thereby generating unemployment in the ‘East’. This slows the migration of human capital towards the East, but …