Labour Market Policies and Outcomes in the Enlarged EU

We document and compare labour market institutions, policies and outcomes in the EU Member States, for the period between 1999 and 2006. Higher employment rates are in general positively associated with measures of policy generosity, especially with the use of active labour market policies (ALMP), and negatively with institutions and policies which induce rigidity in the labour market. We also find evidence that the relation between ALMP and employment levels is non‐monotonic and that it is conditional on the informal institutions prevailing in different countries.