Macroeconomic regimes and labour market policies

This chapter reviews the relation - functional and (where possible) causal - between macroeconomics and labour market policies in the OECD from the emergence of modern macroeconomics and labour market governance starting from the post-war boom years and ending with a glance at today’s crisis-ridden political economies. We define labour market policies in general terms as those that prepare workers for jobs, govern their life chances when they are in a job, and welfare policies that cover their income and employment chances when they are out of a job. We will examine how the post-war ‘Golden Age’ heralded a shift in the relation between macroeconomics and labour market policies as policy tools designed to support each other; and how the Thatcher-Reagan ‘monetarist’ revolution heralded a shift in the nature and orientation of labour market policies in the OECD, which gradually softened, but did not change in character, when social democrats appropriated it in the late 1990s.