Date of publication: 

In many European and other Western countries, labour markets will continue to be reformed in order to accommodate further adjustments to economic, demographic and socio-ecological developments. Moreover, labour market institutions and other aspects of labour markets receive a lot of attention in EU policy debates because they are regarded as key factors of innovation and economic growth. Indeed, our estimates indicate that generous unemployment benefit systems and stringent employment protection legislation lead to lower innovation intensity. These results suggest that high firing costs discourages investment in innovative activities. Interestingly, our case studies reveal that in Central and Eastern European countries institutions such as employment protection legislation and unemployment benefits appeared relatively unimportant to attracting large-scale inward investors. Instead, the lower wage level than in Western Europe appears to be a key factor, alongside the availability of large numbers of semi-skilled workers.
In Work Package 6, we analyze the relationship between labour market institutions and innovation. Furthermore, we examine how EU countries pursue labour market policy reforms, focusing on the key policies of the flexicurity model. Finally, we asses the relative importance of labour market institutions in transitions on the labour market.
The existing research on labour market institutions has been mainly focused on either West European countries or Central and East European countries. In the present study, we examine to what extent our findings apply to both old and new member states of the European Union. Therefore, we start with an overview of the labour market models in Central and Eastern Europe.
In this part of our NEUJOBS research we:
- map existing labour market models. 
- analyze the political economy of labour market models.
- analyze the impact of labour market models on innovation and adoption of new technologies.
- analyze the outcomes of labour market models by a variety of socio-economic indicators

The output of the study includes several deliverables: a comparative mapping of labour market institutions in Central and East European Countries; a longitudinal dataset on the generosity of unemployment benefits for 34 welfare states for the period 1971-2009; a panel data study on the relationship between employment protection legislation and innovation across countries and sectors; a comparative case study on the link between labour market institutions and innovation; and a multilevel analysis on the relationship between labour market institutions and labour market transitions.  

Policy Brief WP6 - final .pdf367.16 KB