He makes the following points:

• The roots of the European unemployment problem lie in the productivity slowdown and commodity price inflation of the 1970s.

• The rise in unemployment led to changes in government policy to protect workers -- more employment protection and more generous unemployment insurance.

• In the 1980s, the unemployment problem was compounded by declining business profits and investment, which reduced labor demand, and conflicts between "insiders" and "outsiders" in the labor market.

• Most countries have partially reversed the labor market policy changes of the 1970s, but only partially, and sometimes with perverse consequences. European labor market institutions are still less employment friendly than they were prior to the 1970s.

• National differences in institutions matter. Countries with well-developed institutions of social partnership, including centralized government-business-labor wage bargaining, seem to have done better than others.