IntroductionDuring their first decades, European welfare states exhibited unemployment rates equalto or less than those of other market economies; but in the 1980's, they suffered largeincreases in unemployment, which have endured. Figure 1 shows that unemploymentin European OECD countries has from 1983 persistently exceeded the OECD averageby around two percentage points. Higher occurrences of long term unemployment haveaccompanied higher levels of unemployment. According to Table 1,...