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The Political Economy of Job Protection and Income Redistribution

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Author Info

  • Amable, Bruno

    ()
    (Paris School of Economics)

  • Gatti, Donatella

    ()
    (University of Paris 13)

Abstract

This paper presents a model allowing to analyze voting, welfare institutions and economic performance. We consider a political economy framework with three classes of agents: entrepreneurs, employed workers and unemployed workers. Agents vote on alternative institutional options: the degree of labour market flexibility and the intensity of redistribution. We show that the welfare state configuration depends on the nature of the political system - majoritarian, coalition, two-party. Because internationalization reduces the possibility for national government to effectively tax profits, the existing political coalition is fragilized by the process of globalization. The model generates results concerning the macroeconomic equilibrium employment level. Hence we can assess the effects of internationalization on macroeconomic performance. The impact of internalization depends on the nature of the political system (majoritarian versus coalition government) and on the institutional configuration (positive flexibility versus positive redistribution).

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1404.

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Length: 26 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1404

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Related research

Keywords: political equilibriums; redistribution; job security; unemployment;

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References

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  1. Torsten Persson & Gerard Roland & Guido Tabellini, 2003. "How Do Electoral Rules Shape Party Structures, Government Coalitions and Economic Policies?," Working Papers 251, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers.
  3. André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
  4. Visser, Jelle & Hemerijck, Anton, 1999. "A Dutch Miracle," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9789053562710, June.
  5. Marco Pagano & Paolo Volpin, 1999. "The Political Economy of Corporate Governance," CSEF Working Papers 29, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Jul 2005.
  6. Bruno Amable & Donatella Gatti, 2004. "Product market competition, job security, and aggregate employment," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 667-686, October.
  7. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
  8. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
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Citations

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Cited by:
  1. Debora Di Gioacchino & Laura Sabani, 2009. "The Politics of Social Protection: Social Expenditure versus Markets' Regulation," Working Papers 116, University of Rome La Sapienza, Department of Public Economics.
  2. repec:hal:wpaper:halshs-00586259 is not listed on IDEAS
  3. repec:hal:cesptp:halshs-00340417 is not listed on IDEAS
  4. Bruno Amable & Donatella Gatti & Jan Schumacher, 2006. "Welfare state retrenchment: The partisan effect revisited," PSE Working Papers halshs-00590537, HAL.
  5. Gatti, Donatella, 2008. "Macroeconomic Effects of Ownership Structure in OECD Countries," IZA Discussion Papers 3415, Institute for the Study of Labor (IZA).
  6. repec:hal:wpaper:halshs-00586260 is not listed on IDEAS
  7. Michaël Zemmour, 2012. "Tax competition and the move from insurance to assistance," Documents de travail du Centre d'Economie de la Sorbonne 12090, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  8. Amable, Bruno, 2008. "Structural reforms in Europe and the (in)coherence of institutions," CEPREMAP Working Papers (Docweb) 0809, CEPREMAP.
  9. Addison, John T., 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals' Costs (Even Lowering One's Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute for the Study of Labor (IZA).
  10. repec:hal:journl:halshs-00348878 is not listed on IDEAS
  11. repec:hal:wpaper:halshs-00590537 is not listed on IDEAS
  12. repec:hal:journl:halshs-00340417 is not listed on IDEAS

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