Generality, State Neutrality and Unemployment in the OECD
According to Buchanan and Congleton (1998), the generality principle in politics blocks special interests. Consequently, the generality principle should thereby promote economic efficiency. This study tests this hypothesis on wage formation and labor markets, by investigating whether generality defined as state neutrality could explain employment performance among OECD countries during 1970-2003. We identify three types of non-neutrality as concerns unemployment. These include the level or degree of government interference in the wage bargaining process over and above legislation which facilitate mutually beneficial wage agreements, the constrained bargaining range (meaning the extent to which the state favors or blocks certain outcomes of the bargaining process), and the cost shifting (which relates to state interference shifting the direct or indirect burden of costs facing the parties on the labor market). Our overall hypothesis is that non-neutrality or non-generality increases unemployment rates. The empirical results from the general conditional model suggest that government intervention and a constrained bargaining range clearly increase unemployment, while a few of the cost shifting variables have unexpected effects. The findings thus give some, but definitely not unreserved, support for the generality principle as a method to promote economic efficiency. One implication may be that the principle should be amended by other requirements if the political process indeed shall be able to promote economic efficiency.
|Date of creation:||Nov 2009|
|Date of revision:||Nov 2009|
|Contact details of provider:|| Postal: |
Web page: http://temep.snu.ac.kr/
More information through EDIRC
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.:
- Congleton, Roger D, 1997. "Political Efficiency and Equal Protection of the Law," Kyklos, Wiley Blackwell, vol. 50(4), pages 485-505.
- Robert Buchele & Jens Christiansen, 1999. "Employment and Productivity Growth in Europe and North America: The Impact of Labor Market Institutions," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 313-332.
- Saint-Paul, Gilles, 2004.
"Why are European Countries Diverging in their Unemployment Experience?,"
CEPR Discussion Papers
4328, C.E.P.R. Discussion Papers.
- Gilles Saint-Paul, 2004. "Why are European Countries Diverging in their Unemployment Experience?," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 49-68, Fall.
- Saint-Paul, Gilles, 2004. "Why are European Countries Diverging in their Unemployment Experience?," IDEI Working Papers 269, Institut d'Économie Industrielle (IDEI), Toulouse.
- Saint-Paul, Gilles, 2004. "Why Are European Countries Diverging in Their Unemployment Experience?," IZA Discussion Papers 1066, Institute for the Study of Labor (IZA).
- Agell, J., 1998.
"On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance,"
1998:17, Uppsala - Working Paper Series.
- Agell, Jonas, 1999. "On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance," Economic Journal, Royal Economic Society, vol. 109(453), pages F143-64, February.
- Agell, Jonas, 1998. "On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance," Working Paper Series 1998:17, Uppsala University, Department of Economics.
- Niclas Berggren, 2000. "Implementing Generality while Reducing the Risk for Fiscal Explosion," Constitutional Political Economy, Springer, vol. 11(4), pages 353-369, December.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
- Winfried Koeniger & Marco Leonardi & Luca Nunziata, 2007.
"Labor Market Institutions and Wage Inequality,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 60(3), pages 340-356, April.
- Lawrence M. Kahn, 2000. "Wage Inequality, Collective Bargaining, And Relative Employment From 1985 To 1994: Evidence From Fifteen Oecd Countries," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 564-579, November.
- Juan Botero & Simeon Djankov & Rafael Porta & Florencio C. Lopez-De-Silanes, 2004.
"The Regulation of Labor,"
The Quarterly Journal of Economics,
MIT Press, vol. 119(4), pages 1339-1382, November.
- Juan Botero & Simeon Djankov & Rafael LaPorta & Florencio López-de-Silanes & Andrei Shleifer, . "The Regulation of Labor," Working Paper 19483, Harvard University OpenScholar.
- Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Justin Wolfers, 1999.
"The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence,"
NBER Working Papers
7282, National Bureau of Economic Research, Inc.
- Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel & Glenda Quintini, 2001.
"The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s - Preliminary Version,"
CEP Discussion Papers
dp0502, Centre for Economic Performance, LSE.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel & Glenda Quintini, 2001. "The Beveridge curve, unemployment and wages in the OECD from the 1960s to the 1990s - preliminary version," LSE Research Online Documents on Economics 20113, London School of Economics and Political Science, LSE Library.
- Stephen Nickell, 2003.
"A picture of European unemployment: success and failure,"
LSE Research Online Documents on Economics
20039, London School of Economics and Political Science, LSE Library.
- Stephen Nickell, 2003. "A Picture of European Unemployment: Success and Failure," CEP Discussion Papers dp0577, Centre for Economic Performance, LSE.
- Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-16, May.
- Salvanes, K-G, 1996.
"Market Rigidities and Labour Market Flexibility : An International Comparison,"
23/96, Norwegian School of Economics and Business Administration-.
- Salvanes, Kjell G, 1997. " Market Rigidities and Labour Market Flexibility: An International Comparison," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 315-33, June.
- Toke Aidt & Zafiris Tzannatos, 2002. "Unions and Collective Bargaining : Economic Effects in a Global Environment," World Bank Publications, The World Bank, number 15241, December.
- André van Stel, 2003. "COMPENDIA 2000.2: a harmonized data set of business ownership rates in 23 OECD countries," Scales Research Reports H200302, EIM Business and Policy Research.
- Burgess, Simon & Knetter, Michael & Michelacci, Claudio, 2000. "Employment and Output Adjustment in the OECD: A Disaggregate Analysis of the Role of Job Security Provisions," Economica, London School of Economics and Political Science, vol. 67(267), pages 419-35, August.
- Morgan, Julian & Mourougane, Annabelle, 2001.
"What can changes in structural factors tell us about unemployment in Europe?,"
Working Paper Series
0081, European Central Bank.
- Julian Morgan & Annabelle Mourougane, 2005. "What Can Changes In Structural Factors Tell Us About Unemployment In Europe?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(1), pages 75-104, 02.
- Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
- James Buchanan, 1993. "How can constitutions be designed so that politicians who seek to serve “public interest” can survive and prosper?," Constitutional Political Economy, Springer, vol. 4(1), pages 1-6, December.
When requesting a correction, please mention this item's handle: RePEc:snv:dp2009:200931. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jorn Altmann)
If references are entirely missing, you can add them using this form.