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Evaluating the Connection Between Social Protection and Economic Flexib ility

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Author Info
Rebecca M. Blank
Richard B. Freeman

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Abstract

Over the last 10 years, a variety of analysts have blamed high unemployment and stagnant economic growth in Europe on inflexible labor markets and pointed to the US as a more flexible economy, due to its less regulated labor markets and less generous social protection programs. This paper reviews that debate, critiques the arguments about the relationship between social protection programs and labor market adjustment, and reviews the research literature on this topic. In general, we conclude that much less is known about the aggregate effects of social protection programs on the economy than is generally claimed. Within the very limited existing research, there is little evidence of a significant trade-off between social programs and labor market adjustment, although there is also not much evidence to support those who claim that social protection promotes economic growth. The paper ends by suggesting future research directions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4338.

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Date of creation: Apr 1993
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Handle: RePEc:nbr:nberwo:4338

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Find related papers by JEL classification:
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General

References listed on IDEAS
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  1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March. [Downloadable!] (restricted)
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  3. Gottschalk, Peter, 1996. "Is the correlation in welfare participation across generations spurious?," Journal of Public Economics, Elsevier, vol. 63(1), pages 1-25, December. [Downloadable!] (restricted)
    Other versions:
  4. Lindbeck, Assar & Snower, Dennis J, 1990. " Demand- and Supply-Side Policies and Unemployment: Policy Implications of the Insider-Outsider Approach," Scandinavian Journal of Economics, Blackwell Publishing, vol. 92(2), pages 279-305.
    Other versions:
  5. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 239-300 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  6. Hansen, Gary D & Imrohoroglu, Ayse, 1992. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 118-42, February. [Downloadable!] (restricted)
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  7. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February. [Downloadable!] (restricted)
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  9. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December. [Downloadable!] (restricted)
  10. Freeman, Richard B, 1988. "Evaluating the European View that the United States Has No Unemployment Problem," American Economic Review, American Economic Association, vol. 78(2), pages 294-99, May. [Downloadable!] (restricted)
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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. Getinet Astatike Haile, 2004. "Re-employment hazard of displaced German workers: evidence from the GSOEP," Working Papers 000284, Lancaster University Management School, Economics Department. [Downloadable!]
  2. Siv Gustafsson & Eiko Kenjoh & Cecile Wetzels, 2001. "Employment Choices and Pay Differences between Non-Standard and Standard Work in Britain, Germany, Netherlands and Sweden," Tinbergen Institute Discussion Papers 01-086/3, Tinbergen Institute. [Downloadable!]
  3. Jonas Agell, 2000. "On the Determinants of Labour Market Institutions: Rent-Sharing vs. Social Insurance," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. Agell, Jonas, 2001. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," Research Papers in Economics 2001:12, Stockholm University, Department of Economics. [Downloadable!]
  5. George C. Bitros & Kyprianos Prodromidis, 2004. "Welfare benefits and the rate of unemployment: some evidence from the European Union in the last thirty years," Macroeconomics 0410004, EconWPA. [Downloadable!]
  6. Noel Gaston & Gulasekaran Rajaguru, 2004. "The Rise (and Fall) of Labour Market Programmes: The Role of Global and Domestic Factors," ISER Discussion Paper 0615, Institute of Social and Economic Research, Osaka University. [Downloadable!]
  7. Sanders Korenman & David Neumark, 1997. "Cohort Crowding and Youth Labor Markets: A Cross-National Analysis," NBER Working Papers 6031, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Cockx, Bart, 1999. "The Design of Active Labour Market Policies. What Matters and What Doesn't ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  9. Agell, Jonas, 2000. "On the Determinants of Labour Market Institutions: Rent-sharing vs. Social Insurance," Working Paper Series 2000:16, Uppsala University, Department of Economics. [Downloadable!]
  10. David R. Howell & Margaret Duncan & Bennett Harrison, 1998. "Low Wages in the US and High Unemployment in Europe: A Critical Assessment of the Conventional Wisdom," SCEPA Working Papers 1998-01, Schwartz Center for Economic Policy Analysis (SCEPA), The New School, revised Aug 1998. [Downloadable!]
  11. Axel Dreher & Noel Gaston, 2006. "Has globalization increased inequality?," KOF Working papers 06-140, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
    Other versions:
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