The aim of this course is to familiarise the students with the major current themes of labour market policy in the context of European welfare states and to provide them with a set of analytical and methodological tools to evaluate and design labour market policies in various contexts. The course will take a comparative approach, i.e. labour market policies in different countries will be compared, as well as an interdisciplinary approach, i.e. use will be made of insights from e.g. economics, sociology and political science. The course is policy-oriented in the sense that students are introduced to converting their theoretical knowledge into thinking about policies and their practical implications.

After this course, the student should be better able to understand labour market policy debates in Europe and should have improved their skills in writing policy reports.

The course exists of different parts:

1. The course starts from explaining supply and demand on a perfect labour market, while continuing by explaining that the perfect labour market does not exist, especially not in the context of European welfare states. The labour market is not a market like any other where the usual laws of supply and demand apply. It is a domain of extensive government intervention. There are different institutions that make the labour market “imperfect”. The theoretical workings of different labour market institutions, as well as their outcomes in terms of efficiency and equity, will be explained. Attention will be paid to a set of specific and important labour market institutions, while ways of measuring and comparing them will be presented. The most important institutions include: a. Wage setting mechanisms b. Unemployment benefits c. Employment protection legislation d. Minimum wage e. Active labour market policies f. Working hours regulation g. Education and training h. Pensions and retirement It will also be shown that there are interactions and complementarities between these institutions that shape labour market outcomes and that one can identify labour market regimes, just like there are welfare state regimes.

2. In the second part of the course, the focus will shift to different threats to economic growth, employment and the welfare state, and the role that labour market policies play in the debates addressing these threats. Ageing populations, globalization, technological change, individualisation, and the current financial and economic crisis all have an impact on how countries organise their labour markets. Moreover, governments have used these threats as arguments for introducing reforms. The course will pay attention to the different ways these threats can impact labour markets and the types of policy responses that have been launched in different countries.

3. Reforming labour market institutions is often slow and complicated. This partly has to do with different groups in society that are well-organised and that have an interest in upholding the status quo. These groups include labour market organisations such as trade unions and employer representatives, but also for example middle-class voters and pensioners’ organisations. When policy-makers initiate reforms, they often have to take into account the interest of such parties, depending of course on how policy processes are organised in a specific country.

The course will pay attention to how decision-making processes are organised in different countries and what roles various interest organisations can play in these. The course will consist of a series of seminars where lectures will be combined with discussions on the basis of the literature that the students are required to read in preparation. Apart from reading some articles that serve as a theoretical background, the main focus will be placed on critically reading policy-oriented reports and publications. These include recent publications of the OECD (e.g. the Employment Outlook), the European Commission and other international organisations, as well as national governments. In this way, the students can familiarize themselves with current debates and different ways of conducting policy-oriented research.

Preliminary schedule of the course (topics):

1. Introduction & practicalities. What are labour market policies/institutions? What do they do and why do they matter in the welfare state?
2. Wage-setting: the state, employers and unions. Minimum wage
3. Job and income protection: employment protection legislation and unemployment benefits
4. Smoothening transitions I: Active labour market policies, education and training.
5. Smoothening transitions II: Retirement
6. Challenges of post-industrialism. Labour markets during the crisis
7. The political economy of labour market reforms. Instructions for final assignment
8. How to write a policy report?

Classes on Mondays from 14:00 to 16:00 in Linna K109, except for November 3 in Linna 4013