ABSTRACT
This chapter discusses the implication that US style labour market flexibility is the answer for Europe. It examines the employment/unemployment performance of the E-4 and the US, considering various alternative measures of joblessness. The chapter explores the role of widely varying labour market institutions and regulations in shaping equally widely varying labour market outcomes among these countries. It addresses the argument that European labour market institutions and regulations are the cause of rising European joblessness. The chapter considers the impact of three different kinds of labour market institutions: employment protection laws, wage setting institutions, and unemployment insurance and other income support programs. It argues that the evidence is mixed, and more importantly, that the same institutions which may contribute to the E-4's unemployment problems also appear to contribute to the relative success of the E-4 in earnings growth and greater earnings equality.
