This study covered a 40-year period from 1956 to 1996. These are characterized by a centralized wage setting process, unemployment pay, mandated dismissal and severance pay and government benefits to the unemployed. This is descriptive of continental Europe, Australia and until 1984 New Zealand. Market-directed Labour markets. Wages and working conditions are determined largely by agreements at the company level.
All unemployment benefits are smaller in number and scale.
The United States, Japan and New Zealand after 1984 fall into this class. While unemployment rose in all OECD countries, the U.S. unemployment rate grew up to 1980 and declined thereafter. Increased benefits to the unemployed increase the incentives to remain unemployed and raise the long-term unemployment rate. Unemployment in southern Italy is three to four times higher than in northern Italy. The minimum wage rates acceptable to northern industry are much too high for southern Italy creating much higher unemployment levels there.