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Employment outcomes in the welfare state

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  • L. Rachel Ngai
  • Christopher 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 policies 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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File URL: http://eprints.lse.ac.uk/3599/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3599.

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Date of creation: May 2008
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Publication status: Published in Revue Economique, May, 2008, 59(3), pp. 413-436. ISSN: 0035-2764
Handle: RePEc:ehl:lserod:3599

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Keywords: welfare state; employment; social services; tax and subsidy;

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References

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  1. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
  2. Edward C. Prescott, 2004. "Why Do Americans Work So Much More Than Europeans?," Levine's Bibliography 122247000000000413, UCLA Department of Economics.
  3. Richard Rogerson, 2007. "Taxation and Market Work: Is Scandinavia an Outlier?," NBER Working Papers 12890, National Bureau of Economic Research, Inc.
  4. Giulia Faggio & Stephen Nickell, 2006. "Patterns of Work Across the OECD," CEP Discussion Papers dp0730, Centre for Economic Performance, LSE.
  5. 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.
  6. Esping-Andersen, Gosta, 1999. "Social Foundations of Postindustrial Economies," OUP Catalogue, Oxford University Press, number 9780198742005, September.
  7. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
  8. Francesco Daveri & Guido Tabellini, . "Unemployment, Growth and Taxation in Industrial Countries," Working Papers 122, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  9. Olivier Blanchard, 2005. "European Unemployment: The Evolution of Facts and Ideas," NBER Working Papers 11750, National Bureau of Economic Research, Inc.
  10. Assar Lindbeck, 1988. "Consequences of the Advanced Welfare State," The World Economy, Wiley Blackwell, vol. 11(1), pages 19-38, 03.
  11. 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.
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Cited by:
  1. 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.
  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. Niko Matouschek & P Ramezzana & Frédéric Robert-Nicoud, 2008. "Labor Market Reforms, Job Instability, and the Flexibility of the Employment Relationship," CEP Discussion Papers dp0865, Centre for Economic Performance, LSE.
  4. L. Ngai & Roberto Samaniego, 2009. "Mapping prices into productivity in multisector growth models," Journal of Economic Growth, Springer, vol. 14(3), pages 183-204, September.

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