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Inequality and the Political Economy of Eurosclerosis

Author

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  • Krugman, Paul

Abstract

Before the early 1970s generous welfare states seemed to be consistent with high employment. Since then, there has been growing concern over disincentive effects of social insurance. This paper suggests that the problem may have arisen in part because European nations were in effect trying to fight market tendencies towards increased inequality. In the United States, with its much more limited welfare state, there has been a striking rise in inequality; a stylized model suggests that the response of redistributive states to these same market forces could have led to a considerable fall in employment.

Suggested Citation

  • Krugman, Paul, 1993. "Inequality and the Political Economy of Eurosclerosis," CEPR Discussion Papers 867, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:867
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is Anemic Employment a Symptom of Hysteresis?
      by Sander Tordoir and Reese Neader in new deal 2.0 on 2011-11-17 23:50:56

    Citations

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    Cited by:

    1. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
    2. Pasimeni, Paolo, 2013. "An Optimum Currency Crisis," MPRA Paper 53506, University Library of Munich, Germany.
    3. Amine, Samir & Lages Dos Santos, Pedro, 2011. "The influence of labour market institutions on job complexity," Research in Economics, Elsevier, vol. 65(3), pages 209-220, September.
    4. Patrick Artus, 2006. "Intégration commerciale avec des pays émergents ayant des ressources importantes en main-d'œuvre qualifiée. Quels effets pour les pays européens ?," Revue économique, Presses de Sciences-Po, vol. 57(4), pages 673-704.
    5. Gerry Boyle; & Pauline McCormack, 1998. "Trade and Technological Explanations for Changes in Sectoral Labour Demand in OECD Economies," Economics, Finance and Accounting Department Working Paper Series n770598, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.

    More about this item

    Keywords

    Eurosclerosis; Inequality; Unemployment; Welfare State;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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