Institutional determinants of employment chances.: The structure of unemployment in France and Sweden

Linked employer-employee data for Sweden and France are used to test competing hypotheses about the structure of unemployment in France and Sweden derived from a comparison of their welfare-state structures, labour-market institutions, and the linkages between their educational system and labour market. Contrary to standard predictions derived from welfare-state theory, the unemployment structure of France does not conform to the classic insider-outsider labour-market model that scholars generally attribute to conservative welfare-state regimes. Instead, France has a flexible two-tier labour marker that produces relatively high entry rates into employment along with the strong age and educational gradients in exit rates that would be expected for a country with high firing costs. Even during the deep recession of the early 1990s, Sweden was also characterized by a strong age gradient in the rate of exit from an employer. However, Swedish rates do not show a strong education gradient, which is the expected consequence of Sweden's loosely linked school and work institutions, and extensive active labour-market policies. Active labour-market policies during the Swedish recession of the early 1990s appear to have further changed the shape of the age-unemployment curve in that country by raising the exit rate of older workers more than would have resulted from the dynamics of labour demand alone.