It is a common view that labor market programs reduce unemployment and restrain wages by increasing the competition for jobs. The Swedish case is often advanced as a blueprint to follow. This article questions the conventional wisdom on the Swedish labor-market policies. It finds empirical...

Membership in a monetary union implies stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than non-membership. This counteracts the stabilisation policy cost of giving up monetary independence. But more wage flexibility is only an...

The recent Western European policy debate on unemployment has emphasized the benefits of active labor market programs. The authors analyze the effects on wage pressure and equilibrium employment in a union wage-setting framework. Programs are wage-reducing to the extent that they help maintain...