Reminder: How an economy of “insiders" functions

A n economy of "insiders" (we will show that this characterises the situation in France) put s two types of employees up against each other: the "insiders", who are protected by labour market rules and for whom the probability of losing their job s is low, and the "outsiders", who have little protection and who lose their jobs during recessions when companies face problems . In an economy of "insiders", the "outsiders" lose their jobs during recessions and the "insiders" keep them; during economic recoveries, the "insiders" obtain wage increases that prevent the "outsiders" from returning to employment . Th is results in significant unemployment hysteresis after recessions and to the "insiders" obtaining the surpluses related to economic recoveries, and this is typically the dynamics seen in France. It is important to combat this functioning of the economy as it generates growing labour market dualism and increasing inequality. An across-the-board increase in wages in France would, on the contrary, lead to a worsening of the economy of "insiders".