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Is the American Model Miss World? Choosing between the Anglo-Saxon model and a European-style alternative

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Author Info
Henri de Groot ()
Richard Nahuis
Paul Tang

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Abstract

In Lisbon, the European Union has set itself the goal to become the most competitive economy in the world in 2010 without harming social cohesion and the environment. The motivation for introducing this target is the substantially higher GDP per capita of US citizens. The difference in income is mainly a difference in the number of hours worked per employee. In terms of productivity per hour and employment per inhabitant, several European countries score equally well or even better than the United States, while at the same time they outperform the United States with a more equal distribution of income. The European social models are at least as interesting as the US model that is often considered a role model.

In an empirical analysis for OECD countries, we aim to unravel 'the secret of success'.

Our regression results show that income redistribution (through a social security system) does not necessarily lead to lower participation and higher unemployment, provided that countries supplement it with active labour market policies. Especially, spending on employment services like job-search assistance and vocational guidance, seems effective. Furthermore, the results suggest that generous unemployment benefits of short duration contribute to employment without widening the income distribution.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Papers with number 40.

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Date of creation: Oct 2004
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Handle: RePEc:cpb:discus:40

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Related research
Keywords: welfare states income inequality employment unemployment participation labour labour market labour market policies labour market policy labor labor market labor market policies labor market policy labour productivity labor productivity productivity

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Find related papers by JEL classification:
H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Paul Cavelaars, 2003. "Has the tradeoff between productivity gains and job growth disappeared?," MEB Series (discontinued) 2003-12, Netherlands Central Bank, Monetary and Economic Policy Department. [Downloadable!]
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    Other versions:
  3. Belot, Michele & van Ours, Jan C., 2001. "Unemployment and Labor Market Institutions: An Empirical Analysis," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 403-418, December. [Downloadable!] (restricted)
    Other versions:
  4. Philippe Aghion & Eve Caroli & Cecilia Garcia-Penalosa, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December. [Downloadable!] (restricted)
    Other versions:
  5. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
    Other versions:
  6. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, 04. [Downloadable!] (restricted)
  7. Martin Neil Baily, 2001. "Macroeconomic implications of the new economy," Proceedings, Federal Reserve Bank of Kansas City, pages 201-268. [Downloadable!]
  8. Martin Neil Baily, 2001. "Macroeconomic Implications of the New Economy," Peterson Institute Working Paper Series WP01-9, Peterson Institute for International Economics. [Downloadable!]
  9. Ruud de Mooij & Paul Tang, 2003. "Four Futures of Europe," CPB Special Publications 49, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  10. Andersen, Torben M., 2004. "Challenges to the Scandinavian welfare model," European Journal of Political Economy, Elsevier, vol. 20(3), pages 743-754, September. [Downloadable!] (restricted)
  11. John P Martin, 1998. "What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences," RBA Annual Conference Volume, in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia. [Downloadable!]
    Other versions:
  12. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March. [Downloadable!] (restricted)
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  13. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May. [Downloadable!] (restricted)
    Other versions:
  14. Richard Nahuis & Henri L.F. de Groot, 2003. "Rising Skill Premia You ain't seen nothing yet?," Working Papers 03-02, Utrecht School of Economics. [Downloadable!]
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wim Suyker & Henri L.F. de Groot & Piet Buitelaar & Jos Ebregt & Stefan Groot & Jan Möhlmann & Hugo Rojas-Romagosa & Bas Straathof, 2007. "India and the Dutch economy," CPB Documents 155, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. R.A. de Mooij, 2004. "Towards efficient unemployment insurance in the Netherlands," CPB Memoranda 100, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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