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Social policies and R&D subsidies: Impact on inequality, unemployment, growth and the tax burden

Author

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  • Nathalie Chusseau
  • Joël Hellier

Abstract

Purpose - The paper seeks to analyse the impact of different public policies on inequality, unemployment, growth and the tax burden. Design/methodology/approach - A dynamic general equilibrium model is built, in which growth is driven by endogenous technical progress, to analyse the impacts of several policies (minimum wage, redistribution and R&D subsidies financed by an income tax). Findings - All policies except pure redistribution are better than non-intervention in terms of growth. The authors distinguish three major policy patterns. The Anglo-Saxon model is characterised by high growth, high inequality, low unemployment and a low tax burden. The Nordic model combines high growth, low inequality and low unemployment, and a high tax burden. The Continental European model puts together medium inequality and a medium tax burden, and higher long-term growth is paid for by high unemployment. Research limitations/implications - The model could be extended by the introduction of educational policy. Originality/value - The paper distinguishes three configurations that capture the main features of the developments in Anglo-Saxon countries, Scandinavian countries, and Continental European countries in the 1990s. It thereby provides a general framework to analyse and compare these experiences.

Suggested Citation

  • Nathalie Chusseau & Joël Hellier, 2008. "Social policies and R&D subsidies: Impact on inequality, unemployment, growth and the tax burden," International Journal of Manpower, Emerald Group Publishing, vol. 29(3), pages 239-262, June.
  • Handle: RePEc:eme:ijmpps:v:29:y:2008:i:3:p:239-262
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    Cited by:

    1. Joël Hellier & Stéphane Lambrecht, 2012. "Inequality, growth and welfare: The main links," Working Papers 258, ECINEQ, Society for the Study of Economic Inequality.

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