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Institutions in the economic fitness landscape: What impact do welfare state institutions have on economic performance?

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  • Schettkat, Ronald

Abstract

This paper uses data from 20 OECD countries to investigate the impact of welfare state institutions (especially employment protection, wage bargaining and work incentives) on the functioning of the labour market both theoretically and empirically. It shows that the impact of welfare state institutions is not as clear-cut as the deregulationists' view suggests. This result may be surprising against the background of the common view that welfare state measures cause European employment problems but it is in line with the outcomes of many other economic studies. The reasons for the ambiguous effects of welfare state institutions are manifold but the most important reason is the complexity of the impacts. There are many side-effects or second-round effects of welfare state institutions which, although often neglected, prove to be very important in the real ‘imperfect market’ world. Many welfare state institutions only have a clear-cut negative effect against the background of the theoretical perfect market model. -- Das Papier untersucht anhand von Daten aus 20 OECD Ländern den Einfluss von wohlfahrtsstaatlichen Einrichtungen (insbesondere Arbeitsschutz, Tarifverhandlungen und Arbeitsanreize) auf die Funktion von Arbeitsmärkten sowohl theoretisch als auch empirisch. Es zeigt auf, dass der Einfluss der wohlfahrtsstaatlichen Einrichtungen nicht so eindeutig ist, wie es die Sichtweise der Deregulierer nahe legt. Dieses Ergebnis mag überraschend sein vor dem Hintergrund der allgemein vertretenen Ansicht, dass wohlfahrtsstaatliche Maßnahmen die Ursache der europäischen Beschäftigungsprobleme sind; es stimmt aber mit den Ergebnissen anderer wirtschaftswissenschaftlicher Studien überein. Die Gründe für die mehrdeutigen Auswirkungen von wohlfahrtsstaatlichen Einrichtungen sind vielfältig, aber der wichtigste Grund ist die Komplexität der Einflüsse. Es gibt viele Nebeneffekte oder nachgelagerte Effekte von wohlfahrtsstaatlichen Einrichtungen, die – obwohl oft vernachlässigt – sich als sehr wichtig in der realen unvollkommenen Marktwelt erweisen. Viele wohlfahrtsstaatliche Institutionen haben nur einen eindeutig negativen Effekt vor dem Hintergrund des theoretisch perfekten Marktmodells.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Labor Market Policy and Employment with number FS I 02-210.

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Date of creation: 2002
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Handle: RePEc:zbw:wzblpe:fsi02210

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Cited by:
  1. Eichhorst, Werner & Feil, Michael & Braun, Christoph, 2008. "What Have We Learned? Assessing Labor Market Institutions and Indicators," IZA Discussion Papers 3470, Institute for the Study of Labor (IZA).
  2. Gunther Tichy, 2005. "Die ,Neue Unsicherheit: als Ursache der europäischen Wachstumsschwäche," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, Verein für Socialpolitik, vol. 6(3), pages 385-407, 08.
  3. Schettkat, Ronald, 2003. "Institutions in the Economic Fitness Landscape: What Impact Do Welfare State Institutions Have on Economic Performance?," IZA Discussion Papers 696, Institute for the Study of Labor (IZA).
  4. Eckhard Hein & Achim Truger, 2005. "What ever happened to Germany? Is the decline of the former european key currency country caused by structural sclerosis or by macroeconomic mismanagement?," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(1), pages 3-28.
  5. Eckhard Hein & Achim Truger, 2005. "Macroeconomic policies, wage developments, and Germany’s stagnation," Macroeconomics, EconWPA 0508015, EconWPA.
  6. Hein, Eckhard & Truger, Achim, 2004. "What ever happened to Germany? Is the decline of the former European key currency country caused by structural sclerosis or macroeconomic mismanagement?," Darmstadt Discussion Papers in Economics 37280, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).

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