"The first part of this project is about employment in Europe, including the new members of the European Union. Both the level of employment and the type of jobs created will be examined. A thorough study of institutional structures and policies is proposed, with a view to arriving at conclusions about their influence on job creation and about the best policy needed to achieve national or European-level employment objectives. Job creation is investigated at the two-digit level and male and female employment, wage inequality and the role of policy will be studied in depth. The research will build on solid theoretical microfoundations taking into account the choices available to firms and workers/consumers about working at home or in the market and buying domestic or foreign goods. The project has a second part about unemployment, with special emphasis on recession. The same emphasis on institutions and policies as for employment is given to this part. A key component of the project is new theory on the evolution of institutions and policies in markets with friction, and on the impact that the policy changes that took place after the recession of the 1980s have had on the responses of European labour markets to the recent recession. Special attention will be given to the formerly planned economies and the reasons for their slow convergence to the western economies."