This report consists of an analysis of labor market conditions in Organisation for Economic Cooperation and Development (OECD) member countries and an exploration of possible future policy responses to the problems of unemployment. Covered in the labor market analysis are the following topics: the macro-economic environment (macro-economic trends and macro-economic costs of unemployment); changing labor market conditions (labor supply trends, changing sectoral employment patterns, and the structure of unemployment); rigidities and flexibility of the labor market (macro-economic evidence and micro-economic evidence); and labor market prospects (short-term prospects and medium-term prospects). The second half of the report examines strategies for increasing and redistributing the demand for labor (increasing the demand for labor through tax policy, employment subsidies, and job creation programs; an employment-oriented incomes policy; redistributing working time; and improved policy targeting) and for reconciling efficiency and equity in the labor market (vocational education and training, public employment services, labor market mobility, international migration, and social policies and labor market efficiency). Appended are a discussion of main orientations of OECD-member labor market policies during the 1970s, a bibliography, statistical data, and related technical information. (MN)