Changes in inequality and unemployment over the 1980s comparative cross-national responses (original) (raw)

This paper reviews the research evidence regarding high and persistent unemployment in the western European nations and widening inequality in the United States and selected European countries. It has been suggested that both of these problems are due to fundamental economic shifts in labor demand within the more industrialized world that have led to declines in the demand for less skilled workers: The effect on countries with more regulated labor markets was rising unemployment, while in less regulated labor markets it was rising wage inequality. The paper considers the evidence for this hypothesis, as well as the research questions and policy issues that it raises.