Corrigendum

This paper argues that an important group of labor market policies are complementary in the sense that the effect of each policy is greater when implemented in conjunction with the other policies than in isolation. This may explain why the diverse, piecemeal labor market reforms in many European countries in recent years have had so little success in reducing unemployment. What is required instead is deeper labor market reforms across a broader range of complementary policies and institutions. To be politically feasible, these reforms must be combined with measures to address distributional issues.

Abstract

This paper argues that an important group of labor market policies are complementary in the sense that the effect of each policy is greater when implemented in conjunction with the other policies than in isolation. This may explain why the diverse, piecemeal labor market reforms in many European countries in recent years have had so little success in reducing unemployment. What is required instead is deeper labor market reforms across a broader range of complementary policies and institutions. To be politically feasible, these reforms must be combined with measures to address distributional issues.

The dependent variables in equations (8) and (14) of “Wage Indexation and the Cost of Disinflation,” by Esteban Jadresie, which appeared in the December 1996 issue of Staff Papers, were misspecified. Equation (8), which appeared on page 806, should read as follows:

yt=mtΠt.

Equation (14), which appeared on page 821, should also read:

yt=mtΠt.