This Selected Issues paper investigates the possible contribution of activation strategies—in a broad sense—to improve employment rates in Finland. It summarizes recent labor market developments in Finland, and investigates respectively the limitation of current unemployment and...

Estonia has succeeded in reducing its macroeconomic imbalances and vulnerabilities, but faces the challenge of preserving its hard-earned fiscal and financial stability and enhancing long-term growth prospects. In this regard, adopting a fully fledged medium-term fiscal framework can help assess...

This paper analyzes the decision of a government facing electoral uncertainty to implement structural reforms in the presence of fiscal restraints similar to the Stability and Growth Pact. The model shows that a pact may harm structural reforms, sacrificing future growth for present stability....

This paper proposes an ex ante evaluation of the effects of new labor contracts such as the "Contrat Nouvelle Embauche" (CNE) introduced in France in 2005. The lessons we draw are of sufficiently general interest to be applicable to other countries or reforms of employment protection laws. Using...

We read search theory's unemployment equilibrium condition as an Iso-Unemployment Curve(IUC).The IUC is the locus of job destruction rates and expected unemployment durations rendering the same unemployment level. A country's position along the curve reveals its preferences over the...

We build a small open economy, real business cycle model with labor market frictions to evaluate the role of employment protection in shaping business cycles in emerging economies. The model features matching frictions and an endogenous selection effect by which inefficient jobs are destroyed in...

Regional labor market discrepancies have been widening in Belgium in the last two decades and are more evident within particular demographic groups. These developments can largely be accounted for by worse matching of people to jobs in the high-unemployment provinces. Using a structural VAR, it...

The Selected Issues paper on Finland underlies public finances and structural reform. The structural reforms encompassing labor and product markets as well the pension system would substantially improve the outlook for fiscal sustainability. Reductions in labor and product market inefficiencies...

This Selected Issues paper describes labor market trends in Belarus and the role of labor market institutions in the outcome. The paper examines the current status of the tax system in Belarus and assesses recent efforts to reform it. It argues that the current tax system in Belarus is...

Using a search and matching labor market equilibrium model, this paper quantifies lost labor productivity and consumption per worker that emerges from the restrictions on dismissals. Dismissal restrictions hamper the efficient reallocation of workers, with workers remaining longer in jobs. But...