Differing European Unemployment Rates: the Case of the Netherlands and Norway

In discussing unemployment problems the current literature tends to emphasise supply shocks and real wage rigidity, hysteresis, failure of relative wages to adjust to market conditions and labour market regulations as important reasons of unemployment. By making a comparative study of the unemployment problems in the Netherlands and Norway, this study emphasises the protection of industries, real interest rates and government fiscal policy as important factors explaining the difference in unemployment between the two countries.