Fighting Unemployment: The Limits of Free Market Orthodoxy

By David R. Howell | Go to book overview
Save to active project

Labor Market Success and Labor
Market Reform: Lessons from
Ireland and New Zealand


The labor market experience of Ireland in the 1990s was entirely exceptional. Employment grew at 3.9% per year. Although the working population grew rapidly (boosted at the end of the period by returning emigrants), the employed share of the working age population (the employment rate) still rose by more than 10%. This was the sharpest increase among OECD countries, which on average recorded little change. Irish unemployment, which had been the second highest in the OECD as late as 1993 (15.6%), had fallen to 4.2% in 2000, among the very lowest in OECD (see figure 6.1).1

New Zealand's employment performance in the 1990s was less spectacular. Employment grew at 1.8% per year, and this pushed the employment rate up by 3%. Unemployment fell over the 1990s by around one-quarter to reach 6.1%, somewhat below the OECD average.

What can be learned from comparing these two small countries? The remarkable turnaround in the Irish economy occurred under a series of national wage agreements, apparently flying in the face of the general move to labor market deregulation. By contrast, the mediocre performance in New Zealand followed perhaps the most thoroughgoing deregulation of the labor market of any OECD country. Yet, according to the OECD, structural unemployment, which abstracts from temporary cyclical factors (also known as the NAIRU), fell only by about 1.5% in the 1990s in New Zealand, while the fall in the Irish NAIRU was put at 7.5% points,2 much the biggest decline of any country.

The contrasting experiences of these two small countries appears to challenge the orthodox free market view that labor market deregulation is


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Fighting Unemployment: The Limits of Free Market Orthodoxy


Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 354

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?