LABOUR DEMAND AND LABOUR MARKET INSTITUTIONS IN RURAL AREAS

A well-functioning rural labour market is crucial as it contributes to a more effective division of labour in the economy. Rural policy in all its forms must address rural regions according to their characteristics and state of development. Even if regionally differentiated policies can be created to promote and facilitate a more efficient labour market policy the crucial issue is not the level at which policies should be implemented. Rather than solving existing policy rigidities, the discovery and promotion of new and more flexible solutions to the problems faced in rural labour markets is what is really required. There is clear need to abandon a uniform policy structure for all rural regions, namely, policy based on national averages, as this is neither desirable nor effective. This paper aims at discussing the impact of structural change in the rural economy and its positive effects on labour demand and on the renewal of rural labour market institutions. In line with conventional economic theory, unemployment is seen as an indicator of the demand for labour. We will thus focus on the labour market institutions, formal and informal which are crucial to counteracting unemployment and stimulating job creation.