This Article Full Text (PDF) Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by HOWELL, D. R. Search for Related Content Social Bookmarking                   What's this?

Increasing Earnings Inequality and Unemployment in Developed Countries: Markets, Institutions, and the "Unified Theory"

It is widely accepted that global forces of technology and trade have caused a profound shift in labor demand toward the most highly skilled, generating sharply rising earnings inequality in flexible labor markets (United States) and persistently high unemployment in rigid labor markets (Europe). This article critically assesses the evidence for this "Unified Theory." It finds little compelling empirical support for either the skill-biased demand-shift explanation for high U.S. earnings inequality or the rigid labor markets explanation for high unemployment in Europe. This assessment challenges the policy orthodoxy of the 1990s that developed economies feature a strict inequality-unemployment trade-off and that policy options are therefore limited to skills enhancement in the United States and labor market deregulation in Europe. It is suggested that the theoretical dominance of the textbook supply/demand model has contributed to the neglect of labor market institutions for U.S. wage outcomes and tight macroeconomic policy for European unemployment.

CiteULike    Connotea    Del.icio.us    Digg    Reddit    Technorati    What's this?

This article has been cited by other articles:

				L. Kenworthy Do Affluent Countries Face an Incomes-Jobs Trade-Off? Comparative Political Studies, December 1, 2003; 36(10): 1180 - 1209. [Abstract] [PDF]