institutionalism with the old institutionalism of Lowell (1908), Laski (1938), and March and Olsen
(1984), he argued for a shift of the focus from constitutions and formal political practices to aspects
of institutions located in the economy and society, and in informal organizational networks (Hall,
1986, 20).
Therefore, elements of Hall’s (1986) institutionalism offer a consistent foundation for building
on Hall and Soskice’s (2001) varieties of capitalism literature. To build on this, all we need is a
return to the new institutionalism theorists such as Skowronek (1982), Shepsle (1986), Levi (1988),
North (1990) , Tsebelis (1990), Immergut (1992), and Weir (1992).
4
To analyze the institutional
determinants of unemployment, we apply a broad conceptual understanding of institutions as in-
cluding a set of norms that structure incentives and sanctions for behavior (North, 1990). As North
(1990) argued, these cannot be confined to formal institutions but need to be extended to cul-
tural customs, regularities, and even ideological consensus. Following Hall and Soskice (2001) and
Williamson (1985), our institutions also include governance structures and social arrangements that
minimize transaction costs. Moving to individual behavior that influences unemployment — namely
incentives for job search, productivity or skill attainment — we think of institutions as structuring
preferences, following Riker’s (1982) view that institutions are "contemporary congealed tastes,"
March and Olsen’s (1984) view that institutions help people discover their preferences, and Dou-
glas’s (1986) view that they are a shared set of meaning that forms the basis for culture and identity.
Finally, the way institutions are believed to change over time gives us a theoretical insight into how
best to conceptualize them. As Pierson (2000) has argued, an analysis of institutions should keep
in mind the critical role of timing, sequencing and inertia that accompanies the process of path
dependent institutional change. Recognizing the interaction between historical change, ideas, and
institutional stability as argued by Orren and Skowronek (1994) and Lieberman (2002) also leads
us to put institutions into their cultural and social contexts.
4
For a review of new institutionalism, see Powell and DiMaggio (1991), Koelbe (1995), Hall (1996), Immergut
(1998), Thelen (1999).
9
Convention