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The Rise (and Fall) of Labour Market Programmes: The Role of Global and Domestic Factors

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  • Noel Gaston
  • Gulasekaran Rajaguru

Abstract

We study the political economy of labour market policies. First, it is shown that tax and redistributive considerations lead inside workers to prefer spending on active labour market programmes to passive spending, e.g., on unemployment benefits. We also show that greater active spending may be a feature of globalising economies. In the empirical work, panel data for OECD countries are used to examine the relationship between active and passive labour market spending, various measures of globalisation and controls relevant for analysing the political economy of labour market policies. Overall, we find that factors other than globalisation are more important determinants of labour market expenditures.

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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0615.

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Date of creation: Aug 2004
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Handle: RePEc:dpr:wpaper:0615

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  1. Rebecca M. Blank & Richard B. Freeman, 1994. "Evaluating the Connection between Social Protection and Economic Flexibility," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 21-42 National Bureau of Economic Research, Inc.
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  4. Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December.
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  7. Michael D. Bordo & Barry Eichengreen & Douglas A. Irwin, 1999. "Is Globalization Today Really Different than Globalization a Hunderd Years Ago?," NBER Working Papers 7195, National Bureau of Economic Research, Inc.
  8. Calmfors, Lars, 1995. "Labour market policy and unemployment," European Economic Review, Elsevier, vol. 39(3-4), pages 583-592, April.
  9. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  10. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
  11. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  12. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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