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Employment Outcomes in the Welfare State

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  • L. Rachel Ngai
  • Christopher A. Pissarides

Abstract

We examine the implications of tax and subsidy policies for employment in the "three worlds of welfare", Anglo-Saxon, Continental European and Scandinavian. We argue that home production is key to a proper evaluation of the employment outcomes. Anglo-Saxon low-support policies encourage more overall market employment. Continental transfer polilcies encourage more home production in services with close substitutes at home. Scandinavian policies give incentives to move home production in social services to the market but discourage other service activity. We find support for our claims in sectoral employment data for five representative countries, United States, Britain, France, Italy and Sweden.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0856.

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Date of creation: Feb 2008
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Handle: RePEc:cep:cepdps:dp0856

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: welfare state; employment; social services; tax and subsidy; three worlds of welfare;

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  1. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc.
  2. Richard Rogerson, 2007. "Taxation and market work: is Scandinavia an outlier?," Economic Theory, Springer, vol. 32(1), pages 59-85, July.
  3. Esping-Andersen, Gosta, 1999. "Social Foundations of Postindustrial Economies," OUP Catalogue, Oxford University Press, number 9780198742005.
  4. Ngai, L. Rachel & Pissarides, Christopher A., 2005. "Structural Change in a Multi-Sector Model of Growth," IZA Discussion Papers 1800, Institute for the Study of Labor (IZA).
  5. Edward C. Prescott, 2004. "Why do Americans Work so Much More than Europeans?," NBER Working Papers 10316, National Bureau of Economic Research, Inc.
  6. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
  7. Giulia Faggio & Stephen Nickell, 2006. "Patterns of work across the OECD," LSE Research Online Documents on Economics 19853, London School of Economics and Political Science, LSE Library.
  8. Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas," Economic Policy, CEPR & CES & MSH, vol. 21(45), pages 5-59, 01.
  9. Daveri, Francesco & Tabellini, Guido, 1997. "Unemployment, Growth and Taxation in Industrial Countries," CEPR Discussion Papers 1681, C.E.P.R. Discussion Papers.
  10. Richard B. Freeman & Ronald Schettkat, 2005. "Marketization of household production and the EU-US gap in work," Economic Policy, CEPR & CES & MSH, vol. 20(41), pages 6-50, 01.
  11. Assar Lindbeck, 1988. "Consequences of the Advanced Welfare State," The World Economy, Wiley Blackwell, vol. 11(1), pages 19-38, 03.
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Cited by:
  1. Ngai, Liwa Rachel & Samaniego, Roberto, 2009. "Mapping prices into productivity in multisector growth models," CEPR Discussion Papers 7318, C.E.P.R. Discussion Papers.
  2. Urban Sila, 2009. "Can Family-Support Policies Help Explain Differences in Working Hours Across Countries?," CEP Discussion Papers dp0955, Centre for Economic Performance, LSE.
  3. Andreas Georgiadis, 2008. "Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Low-Wage Labour Market," CEP Discussion Papers dp0857, Centre for Economic Performance, LSE.
  4. Niko Matouschek & Paolo Ramezzana & Frédéric Robert-Nicoud, 2008. "Labor market reforms, job instability, and the flexibility of the employment relationship," LSE Research Online Documents on Economics 19599, London School of Economics and Political Science, LSE Library.

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