Unemployment Policy: Government Options for the Labour Market

Cover......Page 1
Frontmatter......Page 2
Contents......Page 10
List of figures......Page 17
List of tables......Page 20
Preface......Page 22
Acknowledgements......Page 25
List of conference participants......Page 27
1 Purpose of the volume......Page 30
2 An overview of the volume......Page 33
PART ONE - GENERAL POLICY ISSUES......Page 42
1 Introduction......Page 44
2 Laissez-faire......Page 45
3 Demand-management policies......Page 49
4 Supply-side policies......Page 56
5 Institutional policies......Page 61
6 Contractual policies......Page 65
7 Concluding remarks......Page 73
1 Introduction......Page 83
2 Theory......Page 84
3 Implications for economic policy......Page 93
4 Conclusion......Page 100
Discussion......Page 102
Discussion......Page 106
PART TWO - DEMAND MANAGEMENT AND SUPPLY-SIDE POLICY......Page 110
4 - The role of demand-management policies in reducing unemployment......Page 112
1 Macroeconomic policy and unemployment......Page 113
2 Macroeconomic policies to support supply reforms......Page 125
3 Enhancing the effectiveness of macroeconomic policies......Page 132
4 Conclusions......Page 135
1 Is there a role for stabilisation policy?......Page 140
2 The role of demand management in Europe in the 1990s......Page 142
1 Introduction......Page 145
2 In search of a fundamental model......Page 147
3 Further methodological remarks......Page 151
4 Phelps' models discussed......Page 152
5 Empirical evidence......Page 158
6 Explanation of postwar trends......Page 160
7 Policy implications......Page 161
Discussion......Page 171
Discussion......Page 180
PART THREE - SUBSIDISING EMPLOYMENT AND TRAINING......Page 190
1 Introduction......Page 192
2 The underlying framework......Page 199
3 Self-financing recruitment vouchers......Page 201
4 Targeting the long-term unemployed......Page 202
5 Deadweight and displacement......Page 203
6 Training vouchers......Page 207
7 Estimating the unemployment effects of the BTP......Page 209
8 Concluding thoughts......Page 217
Discussion......Page 228
Discussion......Page 231
7 - Wage subsidy programmes: alternative designs......Page 235
1 The argument for a low-wage employment subsidy......Page 237
2 Employment subsidy schemes......Page 246
3 Conclusions and objections......Page 258
Discussion......Page 273
Discussion......Page 276
1 The weakened position of less-skilled workers......Page 279
2 Policy objectives......Page 289
3 Policy alternatives......Page 293
4 Conclusion......Page 301
Discussion......Page 306
1 Technological progress and unemployment......Page 307
2 Globalisation and unemployment......Page 308
3 Policy......Page 309
1 The race between relative demand and relative supply......Page 311
2 Unemployment......Page 312
3 The USA versus Europe......Page 314
4 The shape and size of transfers......Page 315
5 Supply responses......Page 316
6 Technological progress......Page 317
7 Conclusions......Page 318
Discussion......Page 320
1 Introduction......Page 325
2 The determinants of unemployment rates by skill......Page 328
3 Unemployment and wages by skill......Page 334
4 Should payroll taxes on the unskilled be cut?......Page 349
Appendix: notes to table 10.2......Page 352
Discussion......Page 358
1 Introduction and review......Page 362
2 Substitution and displacement......Page 368
3 Relevant experience......Page 373
Discussion......Page 378
Discussion......Page 380
PART FOUR - LABOUR MARKET REGULATIONS......Page 386
1 Introduction......Page 388
2 A competitive spot labour market......Page 391
3 Labour demand in a competitive labour market with contracts......Page 392
4 Equilibrium employment with long-term contracts and voluntary redundancy pay......Page 395
5 A comparison of the unemployment predictions of the two-period redundancy pay model with other union models......Page 400
6 The unemployment implications of statutory redundancy pay......Page 404
7 Conclusion......Page 407
Appendix......Page 408
Discussion......Page 417
Discussion......Page 421
1 Introduction......Page 424
2 The conventional analysis of regulation in the labour market......Page 425
3 Empirical evidence on the relationship between labour market de-regulation and unemployment......Page 428
4 Why might labour market de-regulation not always reduce unemployment?......Page 439
5 The optimal amount and form of labour market regulation......Page 445
6 Conclusion......Page 447
Data appendix......Page 449
Discussion......Page 453
PART FIVE - POLICY, JOB REALLOCATION AND THE UNEMPLOYMENT--PRODUCTIVITY RELATION......Page 460
1 Introduction......Page 462
2 Basic analytics......Page 463
3 An example: the minimum wage......Page 471
4 Mechanisms......Page 475
5 Productivity growth differences across countries and sectors......Page 481
6 Conclusions......Page 488
Discussion......Page 493
15 - Gross job reallocation and labour market policy......Page 496
1 Preliminaries......Page 497
2 Unemployment and job reallocation......Page 500
3 Job reallocation and labour market policy......Page 506
4 Conclusions......Page 515
Appendix: definitions and sources......Page 516
Discussion......Page 518
1 Do cross-country variations in gross job reallocation tell us anything?......Page 519
2 Is the data what we think it is?......Page 520
3 Are the empirical results significant and robust?......Page 521
4 Should we be concentrating separately on job creation and job destruction rates?......Page 522
Discussion......Page 524
2 Confused causality......Page 525
3 Conclusions......Page 527
PART SIX - COMPARING UNEMPLOYMENT POLICIES......Page 528
16 - Unemployment in the OECD and its remedies......Page 530
1 Trade, development and global competition......Page 531
2 The model......Page 533
3 Simulation of the North--South model......Page 537
4 A preliminary test of the emerging market hypothesis......Page 539
5 Implications for the OECD natural rate of unemployment......Page 548
6 The social problem of low-wage competition......Page 550
7 Policies to deal with the low-wage dilemma......Page 552
8 Conclusions......Page 556
Appendix: the equations of the North--South model......Page 557
Discussion......Page 563
1 The emerging markets hypothesis......Page 564
2 Policy implications......Page 568
1 Introduction......Page 570
2 Trade versus technology and the Minford model......Page 571
3 Solving the low-pay problem......Page 572
17 - The unemployment and welfare effects of labour market policy: a comparison of the USA and the UK......Page 574
1 A simple model of job creation and job destruction......Page 575
2 The qualitative effects of labour policy and wage formation institutions......Page 579
3 Accounting for the UK--US unemployment rate differential......Page 584
4 The effects of individual labour market policies......Page 588
5 The effects of labour policy reforms......Page 590
6 Conclusions and suggestions for future research......Page 594
Mathematical appendix A: the model......Page 596
Mathematical appendix B: functional forms and parameters......Page 598
Discussion......Page 601
Discussion......Page 604
Index......Page 608