Cuttingof Wisdom Teeth

How much mainstream economic analysis allows it to explain the current situation on the labor market?

After the era of full employment experienced by industrial countries during the "30 glorious years", the world is plunged into economic depression since the symbolic year of 1973. This new period is characterized by a deterioration of the labor market. The end of full employment and socio-economic changes have therefore been controversial player in the economic analysis. The early 1980s was marked by the failed policies of Keynesian stimulus. This fact has led to the revival of neoclassical analysis symbolized by including Thatcherism in Britain and Reaganism in the United States. Since the analysis neoclassical stands as the dominant scientific model, which provides explanations Does the current situation of the working world?
We will highlight the situation of the labor market in the first place. We then outline the conditions imposed by neoclassical analysis for full employment and we will try to show the limitations and criticisms we can make this analysis of the labor market.

We propose in this part reflect the current labor market. To explain the employment situation, it is imperative to take into account the socio-economic changes experienced by the world of work. Indeed, significant changes have marked the world of work. Thus, the service sector of the economy during the 1960s has increased. Then we also show the opening of economies is not without influence on the labor market. Finally, job insecurity is a feature of the new world of work.
The socio-economic changes have a direct impact on the world of work. The labor market was strong service sector. Developed countries saw their service employment increase linearly. Thus, in France the service employment grew by 20% between 1974 and 1986 (Figure 1). The labor market is thus characterized by a decline in industrial employment, which recorded a decrease of 20% in France. In the United Kingdom, the decline of industrial employment is even more marked. In less than 20 years manufacturing employment declined by almost 30% (Figure 2). The primary sector represents only 5% of the population, shows that agriculture has entered the era of economy and production-intensive. It is therefore understandable that the industry can withstand such a decline. The number of employees and managers has increased. While these employees were in the minority for 30 glorious years, they are now increasingly in demand. The declining number of workers in the workforce is structural. It is therefore understood that there is an increased need for skilled on the job market. Also add the massive entry of women into the labor market. These are more affected by unemployment. So in 1995 they are 14.9% to be unemployed while 14.3% are men to be unemployed (Table VI). The difference is even more pronounced when comparing men and women over 50 years so there would be discrimination. Indeed, by 1995 39% of workers receive the minimum wage are more than double their counterparts male.
The internationalization of trade and globalization are factors of paramount importance today. There would thus be an international division of labor that would help to promote skilled labor in developed countries. Therefore, low-skilled industries are most affected by unemployment. Indeed, the relocation of firms in industrialized countries seem to confirm the model according to which the design work takes place in industrialized countries, while production in some respects is qualified with a cheaper labor in the Third World . It is built in as well developed an ideal worker more skilled and more versatile. Globalization has spent the flexibility of the workforce. Therefore there is a job insecurity.
Youth are representative of this insecurity. Their later entry into the world of work is coupled with the temporary nature of employment. The number of temporary workers in France increased from 171 000 to 287 000 from 1993 to 1995 (Table VIII). The fixed-term contracts have doubled in 10 years (Table VIII). This situation of growing precariousness meets the requirement of business a flexible workplace where they are not obliged to hire permanently. They prefer to adjust employment to production (Figure 14). By CSD and temporary work they avoid the direct costs of turnover. They do not have to pay redundancy or training novices although admittedly the specific costs of the interim.

Such is the current labor market, varying according to the uncertain world economic fluctuations. Why the neoclassical theory does advance when the idea that there could be full employment? What conditions they presuppose?

According to neoclassical theory, the economy is characterized by actors who are homo economicus. It is therefore assumed that everyone seeks to maximize utility or profit. Adam Smith noted that the search of personal interest that contributed to the general interest. Therefore let the market and the State does not particularly bother him. Therefore we will consider the equilibrium conditions and explanations of underemployment. The neoclassical refuse market disruption, then we will see that the place of investment is essential in the neoclassical paradigm then we will only increase inflation is unnecessary according to neoclassical. The neoclassical analysis
thinks in terms of supply and demand when it comes to market. Now it is matter of "labor market" is that you then apply the same logic as other markets. Given the importance of opportunities for employment, we must consider the law of markets by Jean-Baptiste Say from where supply creates its own demand. The logic of neoclassical place and the supply side. She must be encouraged. Firms hire workers until the last worker productivity is zero. Indeed, the company does not use a loss it is imperative that the gains are at least as high as the costs. Therefore the neoclassical focus on labor costs. The market decides on a balance pay should not be disturbed. The unions succeeded in establishing minimum wages in collective agreements, disrupt the proper functioning of the market. Moreover, by imposing taxes, the state squeezes corporate revenues And that is the fundamental reason for the current labor market. When the market is not disrupted, there can be voluntary unemployment. That individuals choose not to work at the cost of wages to equalize. Otherwise the job market is disrupted. The United States, which are more respectful of these principles and record significant growth in the number of employees (Chart 7).
neoclassical analysis, however, incorporates the theories of efficiency wage and insider-outsider. The efficiency wage theory recognizes that workers are paid beyond their Real productivity in order to motivate them. In fact, the extra pay is to increase productivity. The insider-outsider theory shows that there are actually two labor markets. Insiders are actually hired and have a very strong bargaining power with employers. They are pushing to increase their wages during booms and thus prevent that the insiders are hired. In a recession they defended their high pay. The outsiders are doomed to instability. This theory would explain the increase in precarious employment (Chart 11).
neoclassical analysis also gives priority to investments. Helmut Schmidt's theorem and assumes that investments are generating employment. Therefore, they should be encouraged by low interest rates for both not to increase the investment costs of debt and not to encourage them to invest capital. Somehow, the high interest rates of the 1970s are called as partially responsible for the crisis.
current monetarist Milton Friedman whose spokesman, has made efforts to show the futility of monetary policy. His criticism is that inflation should be absolutely controlled. The criticism of the Phillips curve seems to be corroborated by the 1970 situation where there is stagflation for the first time. Inflation is over 24% in the United Kingdom in 1975 to over 20% in Italy at the end of the 1970s, the United States and France, it exceeds 13% (Table XII). Yet unemployment is present. For monetarist inflation is driven by an increase in money supply is radically useless. The individual homo economicus does not suffer money illusion. Theory quantity of money seems therefore confirmed. Only the actual account. In addition, inflation complicates predictions of entrepreneurs.
Now despite the decline in inflation in the 1980s, depression continues. In 1985, all G7 countries have inflation below 10%. Most like Canada are even below 5% (Table XII). This means that neoclassical analysis can not satisfactorily explain the depressed labor market. Therefore we will highlight its limitations.

We will consider the limits of neoclassical explanations about the costs Labour, then inflation and explain policy failure recovery.
neoclassical discourse on labor costs suggests too much influence in the union collective agreements. But in recent years have been characterized by a profit-sharing pay for firms (Figure 16). The evolution of the minimum wage is almost zero in ECUs constant European Union in the 1980s (Chart 22). This tells us how he would qualify the discourse on labor costs (in the aspect of salary). Speaking of voluntary unemployment is also unfounded; respondents say they want to work harder when they are part time. Given the decline in consumer prices should not we reconsider the effective demand?
Inflation as decried by neoclassical regained its 1960 level (Chart 17). Interest rates are low, yet the unemployment persists. Encourage investment returns does not necessarily increase employment contrary to the theorem of Helmut Schmidt. By focusing on productivity investments at the expense of investment in capacity, companies do not improve the situation of the labor market. Thus it to the extent that investments in capacity are privileged that the job market encourages more employees. If investment depends on the economy, then we must take into account the actual demand and then the taxes may initially stimulate consumption and be conducive to investment.
But it is clear that stimulus policies have failed in the 1980s. must explain this failure in the context of globalization. Keynesians propose forms of protectionism against countries which do not meet the minimum working conditions and minimum wages. In such circumstances, equity would be restored between friendly countries and other rules.
Moreover, the situation of the labor market translates into the bottom the crisis of Fordism from the regulation school. Capitalism is punctuated by crises would also experience a crisis of monopoly control of the postwar period, according to Michel Aglietta. Schumpeter's perspective is to point out that capitalism follows a process of creative destruction. Thus, technical progress even if it generates at first the destruction of jobs, favors employment. This analysis deep shade neoclassical analysis which is confined to a stable equilibrium and without fault when we respect the market.

The mainstream economic analysis implicitly proposes the development of flexibility which leads anyway unemployment or at least part of precarious employment. Systematically castigate state intervention allows this analysis to suggest that this is the real reason for the employment crisis. Analyses like those of Schumpeter and Aglietta show that the labor market does not systematically regulates seizure-free. Although the reduction in working time is considered it should not induce instability.