How to Reduce Unemployment in Europe, edited by Mario Baldassarri. Central Issues in Contemporary Economic Theory and Policy Series. Houndmills, Basingstoke, U.K., and New York: Palgrave, in association with Rivista di Politica Economica, Rome. 2003. Cloth, ISBN 1403908044, $69.95. 164 pages.
The topic of this volume is Europe's high and "hysteretic" (i.e., persistent and "reform"-resistant) unemployment. Compared with the USA, Europe appears to perform worse in terms of employment. This issue has been a persistent topic of transatlantic discussion among certain groups of economists who seek to help "old" Europe with injections of Anglo-Saxon remedies. A similar discussion took place in the 1980s under the heading of"Barriers to European Growth" (see my review of R. Z. Lawrence's and C. L. Schultze's edited Brookings volume with that title in the JEI, no. 3, 1989, 912-16, where I argued that Europe might live quite well in transatlantic competition with the "rigidities" and labor market "hysteresis").
This volume, published in 2003, is a 1998(!) memorandum by a group of American and Italian economists whose representation centers around MIT and Rome's La Sapienza. One of the initiators of "A Manifesto for Employment" was the late Franco Modigliani (MIT). Among the Italians are Paolo Sylos Labini and Fiorella Padoa-Schioppa, two former EU advisors. In sum, there appear some thirty-five names. The list of MIT authors includes Modigliani, Robert Solow (as writers), Paul Samuelson, and others. Finally, the contributors include not so "mainstream" authors such as the late James Tobin and Luigi Pasinetti.
The volume is a collection of short individual contributions. For instance, Lester Thurow has contributed a piece on increasing the industrial flexibility in which he pleads for a European program to support the formation and growth of new companies. Ireland's deputy prime minister contributed four pages on "Ireland's Recipe." Finally, some fifty pages contain the Italian discussion with contributions by an entrepreneur and representatives of industry associations, trade unions, and public administration. By and large the international reader is well advised to enter straight into the manifesto's text itself to learn about the argument of this group.
The manifesto does not attempt to provide a balance sheet of the comparative performances of the Anglo-Saxon culture relative to the "Rheinian" capitalism. An interesting literature emerged on this...