We study the implications of product and labor market imperfections for equilibrium unemployment under both exogenous … equilibrium unemployment. The relationship between the long-run unemployment and the intensity of product market competition is … long-run equilibrium unemployment is an increasing function of product market imperfections when the elasticity exceeds …

this unforeseen increase in unemployment. We then discuss the role of labour market institutions in the adjustment process … that has brought unemployment back to 'normal' levels. We argue that these institutions cannot be blamed for the increase … in unemployment, but that more flexible institutions could have lead to a more rapid decline in unemployment. …