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EURO-PRODUCTIVITY AND EURO-JOBS SINCE THE 1960s: WHICH INSTITUTIONS REALLY MATTERED?

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Author Info

  • Peter Lindert
  • Gayle Allard

    (Department of Economics, University of California Davis)

Abstract

How have labor market institutions and welfare-state transfers affected jobs and productivity in Western Europe, relative to industrialized Pacific Rim countries? Many studies have tackled this question, with mixed and often unclear results. This paper proposes an eclectic comparative economic history, giving a clearer answer to the issue than past studies have implied. Orthodox criticisms of European government institutions are right in some cases and wrong in others. Protectionist labor-market policies such as employee protection laws seem to have become more costly since about 1980, not through overall employment effects, but through the net human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations in core sectors may also have reduced GDP, though here the evidence is less robust. By contrast, high general tax levels have shed the negative influence they might have had in the 1960s and 1970s. Similarly, other institutions closer to the core of the welfare state have caused no net harm to European jobs and growth. Coordinated collective wage bargaining has saved jobs throughout the postwar period, with no cost in terms of productivity. The welfare state’s tax-based social transfers have not harmed either employment or GDP. Even unemployment benefits do not have robustly negative effects.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 619.

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Length: 62
Date of creation: 05 May 2006
Date of revision:
Handle: RePEc:cda:wpaper:06-19

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Keywords: labor; market; jobs;

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References

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  1. Lynn Parramore: Mr. Davidson's Planet: NPR/NYT Guru Adam Davidson's Discredited Economic Principles
    by Lynn Parramore in huffington post business on 2012-01-13 16:52:35
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Cited by:
  1. Ian Dew-Becker & Robert J. Gordon, 2008. "The Role of Labor Market Changes in the Slowdown of European Productivity Growth," NBER Working Papers 13840, National Bureau of Economic Research, Inc.
  2. Gayle Allard & Cristina Simon & Raquel Martin, 2007. "Capturing Talent: Generation Y and European Labor Markets," Working Papers Economia wp07-15, Instituto de Empresa, Area of Economic Environment.
  3. Albert van der Horst & Hugo Rojas-Romagosa & Leon Bettendorf, 2009. "Does employment affect productivity?," CPB Discussion Paper 119, CPB Netherlands Bureau for Economic Policy Analysis.
  4. Alberto Behar, 2009. "Tax Wedges, Unemployment Benefits and Labour Market Outcomes in the New EU Members," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(1), pages 069-092, March.
  5. Karl Aiginger & Alois Guger & Thomas Leoni & Ewald Walterskirchen, 2007. "Reform Perspectives on Welfare State Models in Global Capitalism," WIFO Working Papers 303, WIFO.

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