38th Congress of the European Regional Science Association: "Europe Quo Vadis? - Regional Questions at the Turn of the Century", 28 August - 1 September 1998, Vienna, Austria
Unemployment remains a major economic and social problem in many developed economies. This paper provides theoretical and empirical perspectives on the impact of labour market deregulation as a means of combatting unemployment and of enhancing competitive wage determination. The paper focusses specifically on The Netherlands and New Zealand, two small open economies in which unemployment rates reduced to half their respective previous peaks during the last decade. The labour market policies that contributed to this outcome are referred to as the "Polder" model and the "Kiwi" model respectively. Despite some similarities, there are significant differences between the models. These are highlighted in the paper. Methodological issues regarding empirical tests of the impact of labour market deregulation measures are also addressed. The paper concludes with a survey of remaining research issues.