ABSTRACT
The problem of unemployment in Europe is vexed by a theory-driven predisposition to blame it on defects of labor market structure – ‘rigidities’ – and then to go out in search of the particular rigidities that are to blame. This has been a wild goose chase, as Baker, Glyn, Howell and Schmitt (2004) have documented with care. Indeed, these authors find that the entire power of institutional explanations for unemployment differences across Europe rests on the fact that centralised collective bargaining and union density are associated with less – not more – unemployment. Apart from that, institutional effects remain elusive.
