ABSTRACT
The spirit of economics in the 1980's was clearly of unregulated markets producing optimal outcomes. Regulation was regarded as an impediment to otherwise well-functioning markets. Labor market institutions in Germany and in Europe in general were the prime target of free market advocates and indeed the performance of European labor markets looked quite bad, with its high levels of unemployment and low rates of job growth. 1 The far less regulated U.S. labor market produced high rates of employment growth and decreasing rates of unemployment despite a growing labor force. In contrast, employment in Europe was stagnating and unemployment was rising or remaining at high levels. 2
