Paradoxically, politicians in Western Europe generally accept the claim that labor market rigidities are at least partly responsible for high unemployment levels, yet they have not translated their vocal commitment to fight unemployment into an overhaul of the labor markets. My dissertation research focuses on the processes of interest formation and representation behind the initiation of labor market reforms and during subsequent rounds of reform. I hypothesize that systems of representation that inhibit the formation of cross-class alliances impede the building of the necessary political support for reform, and that the implementation of reforms that are characterized by "increasing returns" reduce political opposition to further reforms. I analyze these hypotheses through an examination of the major employment initiatives proposed in Germany and the Netherlands during the 1980s and early 1990s.