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Labour Supply, the Natural Rate, and the Welfare State in The Netherlands: The Wrong Institutions at the Wrong Point in Time

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  • Broersma, Lourens
  • Koeman, Jan
  • Teulings, Coen

Abstract

This paper analyses the causes of the Dutch Miracle. Low wage increases in The Netherlands compared to the rest of Europe are the main factor explaining the fast employment growth. Two factors can explain wage growth lagging behind: the 1982 Wassenaar-agreement between trade unions and employers and the realignments in the welfare state. A small macroeconomic model for the Dutch economy is estimated to analyse these issues. The residuals of wage equation do not show systematic negative residuals for the post-1982 period. The generosity of the welfare state has a clear effect, but data do not allow the magnitude of this to be precisely established. Furthermore, our model shows that the Dutch labour market adjusts rapidly to adverse shocks. In fact, the exceptional performance of the Dutch labour market in the early 1990s is predominantly caused by its ability to adjust to shocks compared to the rest of continental Europe. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Broersma, Lourens & Koeman, Jan & Teulings, Coen, 2000. "Labour Supply, the Natural Rate, and the Welfare State in The Netherlands: The Wrong Institutions at the Wrong Point in Time," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 96-118, January.
    • Handle: RePEc:oup:oxecpp:v:52:y:2000:i:1:p:96-118
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    Citations

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    Cited by:

    1. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
    2. repec:dgr:rugsom:02d07 is not listed on IDEAS
    3. Lourens Broersma & Jouke van Dijk, 2002. "Regional labour market dynamics in the Netherlands," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(3), pages 343-364.
    4. Norbert Berthold, 2001. "Das Bündnis für Arbeit – Ein Weg aus der institutionellen Verflechtungsfalle?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 2(4), pages 383-406, November.
    5. Inge Sieben & Andries De Grip & Jessica Longen & Ole Sørensen, 2009. "Technology, Selection, and Training in Call Centers," ILR Review, Cornell University, ILR School, vol. 62(4), pages 553-572, July.
    6. Lex Borghans & Ben Kriechel, 2009. "Wage Structure and Labor Mobility in The Netherlands, 1999-2003," NBER Chapters, in: The Structure of Wages: An International Comparison, pages 125-148, National Bureau of Economic Research, Inc.
    7. David R. Howell & Dean Baker & Andrew Glyn & John Schmitt, 2006. "Are Protective Labor Market Institutions Really at the Root of Unemployment? A Critical Perspective on the Statistical Evidence," CEPR Reports and Issue Briefs 2006-14, Center for Economic and Policy Research (CEPR).
    8. Jan C. van Ours & Jan C. van Ours, 2003. "Has the Dutch Miracle Come to an End?," CESifo Working Paper Series 917, CESifo.
    9. Sébastien Jean, 2000. "Emploi : les enseignements de l'expérience néerlandaise," Économie et Statistique, Programme National Persée, vol. 332(1), pages 133-157.
    10. Antonio Rodriguez-Gil, 2018. "Hysteresis and labour market institutions. Evidence from the UK and the Netherlands," Empirical Economics, Springer, vol. 55(4), pages 1985-2025, December.
    11. Broersma, Lourens & Dijk, Jouke van, 2002. "How do Dutch regional labour markets adjust to demand shocks?," Research Report 02D07, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    12. de Regt, E.R., 2004. "Hourly wages and working time in the Dutch market sector 1962-1995," Research Memorandum 028, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    13. Sébastien Jean, 2000. "Syndrome, miracle, modèle polder et autres spécificités néerlandaises," Working Papers 2000-12, CEPII research center.
    14. Erik de Regt, 2009. "Hourly wages and working time in the Dutch market sector 1962-1995," Applied Economics, Taylor & Francis Journals, vol. 41(6), pages 765-778.

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