thereby for equilibrium unemployment in an economy with product and labour market imperfections. We show that intensified … product market competition will reduce equilibrium unemployment, whereas the effect of increased capital intensity is more … complex. Higher capital intensity will decrease the equilibrium unemployment when the elasticity of substitution between …

unemployment. We then discuss and research the role of labour market institutions in the adjustment process that has brought … unemployment back to a ‘normal’ level. We argue that these institutions cannot be blamed for the increase in unemployment, but that … more flexible institutions could have led to a more rapid fall in unemployment once the Finnish economy began to recover. …