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Sharing risk: on social risk management and the governance of labour market transitions

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  • Schmid, Günther

Abstract

This is a paper based on the annual lecture in honour of Hugo Sinzheimer at November 10, 2005, Hugo-Sinzheimer-Institute at the University of Amsterdam. In 1928, Sinzheimer wrote an article entitled 'Die Demokratisierung des Arbeitsverhältnisses,' (The Democratisation of the Employment Relationship). His references to unemployment insurance that had been enacted just one year earlier went beyond the participation of trade unions and employers in administration as an essential element of democratization. Sinzheimer put even more emphasis on another aspect of democratization, namely, the enlargement of the risksharing community to embrace all workers, indeed, the whole economy. The argument of the paper is that sharing risks through universal and state-guaranteed unemployment insurance is still as valid as in the time of Hugo Sinzheimer. There is no reason to roll back the welfare state. On the contrary, there are strong reasons to defend the principle of social insurance. By combining a kind of work-life insurance with soft forms of governance, this principle - that of 'sharing risks' - can even be extended to include the new risks related to critical events during the life course. The argument is developed by answering the following questions: First, what are the new risks to which established insurance systems have to respond? Second, what are the advantages of social insurance compared to private savings? Third, how should we share for example the risks related to parenting and to continuing education and training? Fourth, how do we overcome risk-aversion to stimulate more individual risk-taking and thereby more responsibility?

Suggested Citation

  • Schmid, Günther, 2006. "Sharing risk: on social risk management and the governance of labour market transitions," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-101, Social Science Research Center Berlin (WZB).
  • Handle: RePEc:zbw:wzblpe:spi2006101
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    References listed on IDEAS

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    1. Sinn, Hans-Werner, 1995. " A Theory of the Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 495-526, December.
    2. 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 143-164, February.
    3. Siv Gustafsson & Eiko Kenjoh & Cécile Wetzels, 2002. "The labour force transitions of first-time mothers in Britain, Germany, the Netherlands and Sweden," Chapters,in: Labour Markets, Gender and Institutional Change, chapter 9 Edward Elgar Publishing.
    4. Hans-Werner Sinn, 1996. "Social insurance, incentives and risk taking," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 259-280, July.
    5. James J. Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 778-811.
    6. Jonas Agell, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, Verein für Socialpolitik, vol. 3(2), pages 107-135, May.
    7. Pearson, Mark & Martin, John P., 2005. "Should We Extend the Role of Private Social Expenditure?," IZA Discussion Papers 1544, Institute for the Study of Labor (IZA).
    8. Chapman, Bruce & Ryan, Chris, 2005. "The access implications of income-contingent charges for higher education: lessons from Australia," Economics of Education Review, Elsevier, vol. 24(5), pages 491-512, October.
    9. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, January.
    10. Muffels, Ruud & Wilthagen, Ton & van den Heuvel, Nick, 2002. "Labour market transitions and employment regimes: Evidence on the flexibility-security nexus in transitional labour markets," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 02-204, Social Science Research Center Berlin (WZB).
    11. Peter A. Diamond (ed.), 1999. "Issues in Privatizing Social Security: Report of an Expert Panel of the National Academy of Social Insurance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041774, January.
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    Cited by:

    1. Sesselmeier, Werner & Somaggio, Gabriele & Yollu, Aysel, 2006. "Mögliche Implikationen der gegenwärtigen Arbeitsmarktreformen für die zukünftige Entwicklung der Arbeitslosenversicherung," Arbeitspapiere 126, Hans-Böckler-Stiftung, Düsseldorf.
    2. Schulze Buschoff, Karin, 2007. "Self-employment and social risk management: Comparing Germany and the United Kingdom," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2007-103, Social Science Research Center Berlin (WZB).

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