The Labour Market

Abstract

Studying the labour market requires looking at the underlying long-term trends. To a large extent, supply depends on demographic, social and cultural aspects which change only slowly over long periods of time. In a long-term perspective, educational levels, standards and policies shape both supply and demand. Other factors generate short-term fluctuations, such as prices in product markets, exchange and interest rates, and the level of aggregate economic activity. There are also sources of sudden, one-off movements, such as institutional change. All these are discussed in this chapter, with particular emphasis being put on the long-term decline in surplus labour, and on the effects of shorter-term shocks in 1971–73, the mid-1970s and early 1980s crises, the 1979 Labour Law, and the change of government in 1990. Mention is also made of some instances of segmentation and discrimination, a subject which is looked at again in the next chapter on women. In the long term import substitution failed to generate jobs; the short-term effects on employment of opening the economy, both positive and negative, have been modest (Corbo and Meller, 1981; Cortes and Sjaastad, 1981).