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Evaluating the Connection Between Social Protection and Economic Flexib ility

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  • Rebecca M. Blank
  • Richard B. Freeman

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.

Suggested Citation

  • Rebecca M. Blank & Richard B. Freeman, 1993. "Evaluating the Connection Between Social Protection and Economic Flexib ility," NBER Working Papers 4338, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4338
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    Cited by:

    1. Agell, J., 2000. "On the Determinants of Labour Market Institutions: Rent-sharing vs. Social Insurance," Papers 2000:16, Uppsala - Working Paper Series.
    2. Olivier Davanne & Thierry Pujol, 1996. "Assurance et échanges de risque sur le marché du travail," Économie et Statistique, Programme National Persée, vol. 291(1), pages 151-169.
    3. Fischer, Justina A.V., 2012. "Globalization and Political Trust," Papers 285, World Trade Institute.
    4. Jonas Agell, 2001. "Warum haben wir rigide Arbeitsmärkte? Rent‐seeking versus Soziale Sicherung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 2(4), pages 363-381, November.
    5. Sanders Korenman & David Neumark, 2000. "Cohort Crowding and Youth Labor Markets (A Cross-National Analysis)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 57-106, National Bureau of Economic Research, Inc.
    6. Vodopivec, Milan & Raju, Dhushyanth, 2002. "Income support systems for the unemployed : issues and options," Social Protection Discussion Papers and Notes 25529, The World Bank.
    7. 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.
    8. Bart COCKX, 2000. "The design of active labour market policies: Building in effective incentives," International Labour Review, International Labour Organization, vol. 139(4), pages 457-480, December.
    9. Axel Dreher & Noel Gaston, 2008. "Has Globalization Increased Inequality?," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 516-536, August.
    10. Alois Guger & Thomas Leoni, 2006. "Teilstudie 15: Arbeitsmarktflexibilität und soziale Absicherung," WIFO Studies, WIFO, number 27454.
    11. Agell Jonas, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, De Gruyter, vol. 3(2), pages 107-135, May.
    12. Abiodun O. Folawewo, 2016. "Institutions, regulatory framework and labour market outcomes in Nigeria," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 18(1), pages 67-84, October.
    13. Adeola F. Adenikinju & Olugboyega Oyeranti, 1999. "Characteristics and Behaviour of African Factor Markets and Market Institutions and Their Consequences for Economic Growth," CID Working Papers 31A, Center for International Development at Harvard University.
    14. Cockx, Bart, 1999. "The Design of Active Labour Market Policies. What Matters and What Doesn't ?," LIDAM Discussion Papers IRES 1999035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Fischer, Justina A.V., 2012. "The choice of domestic policies in a globalized economy," Papers 306, World Trade Institute.
    16. Alfonso Arpaia & Gilles Mourre, 2012. "Institutions And Performance In European Labour Markets: Taking A Fresh Look At Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 1-41, February.
    17. 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 paper series. 1998-01, Schwartz Center for Economic Policy Analysis (SCEPA), The New School, revised Aug 1998.
    18. Mares, Isabela, 1996. "Firms and the welfare state: the emergence of new forms of unemployment," Discussion Papers, Research Unit: Economic Change and Employment FS I 96-308, WZB Berlin Social Science Center.
    19. Aino Salomäki & Teresa Munzi, 1999. "Net Replacement Rates of the Unemployed. Comparison of various approaches," European Economy - Economic Papers 2008 - 2015 133, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    20. Jeff Borland, 1994. "An Assessment of the Green Paper," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(1), pages 11-14, January.
    21. Schettkat, Ronald, 2002. "Institutions in the economic fitness landscape: What impact do welfare state institutions have on economic performance?," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 02-210, WZB Berlin Social Science Center.
    22. Muhammad Tariq Majeed & Shamsa Kanwal, 2019. "The Global Integration and Transmission of Social Values: A Case of Family Ties," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 703-729, January.
    23. 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, University Library of Munich, Germany.
    24. 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.
    25. Fischer, Justina A.V., 2012. "The choice of domestic policies in a globalized economy: Extended Version," MPRA Paper 37816, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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