Universities and academics:
Modelling and data:
Universities and academics:
Modelling and data:
It took a while but my contribution to the symposium on dualization in PSRM is finally out in first view!
My article explores empirically how different types of labor market inequality affect policy preferences in post-industrial societies.
I argue that the two main conceptualizations of labor market vulnerability identified in the insider–outsider literature are complementary: labor market risks are shaped by both labor market status—whether an individual is unemployed, in a temporary or permanent contract—and occupational unemployment—whether an individual is in an occupation with high or low unemployment.
As a result, both status and occupation are important determinants of individual labor market policy preferences.
In this paper, I first briefly conceptualize the link between labor market divides, risks and policy preferences, and then use cross-national survey data to investigate the determinants of preferences.
Check out other papers in this symposium by Achim Kemmerling, Marius Busemeyer, Silja Hausermann, Hanna Schwander, Philip Rehm, Georg Picot, Paul Marx and David Rueda!
There is a long-standing debate in academic and policy making circles about the normative merits and economic effects of a Universal Basic Income (UBI). However, existing literature does not sufficiently address the question of the factors associated with individual support for a UBI. While a large literature in political economy has focused on individual preferences for existing welfare state benefits, it has not analysed the case of a UBI.
I seek to remedy this gap in a new journal article entitled “The Political Economy of individual level support for the basic income in Europe” forthcoming at the Journal of European Social Policy.
Using the eighth wave of the European Social Survey (ESS), I analyse individual support for a UBI in 21 European countries. The findings from logistic regression analyses with country fixed effects are partly consistent with the expectations of previous social policy and political economy literatures. Younger, low-income, left-leaning individuals and the unemployed are more likely to support a UBI. Individuals with positive views of benefit recipients, and/or high trust in political institutions are also more supportive, while anti-immigration attitudes are associated with lower support.
However, the patterns across occupations is mixed and male respondents appear slightly more supportive. Trade union membership is not statistically significant, perhaps because of contradictory effects: unions typically support new welfare state policies but they also have a key role in many existing welfare state schemes and may worry about individuals’ attachment to the labour market. At the country level, support tends to be higher where activation is more pronounced and unemployment benefits less generous.
Taken together, these results suggest one possible reason why countries with large support for a UBI have not introduced it: the mixed support among the Left means a pro-UBI coalition has to draw on right-wing voters who may support it only with lower taxes and/or extensive replacement of welfare state benefits, which in turn may further alienate parts of the Left.
For more information you can access the PDF of the article
The Universal Basic Income (UBI) has a long history. The idea to provide all citizens with an unconditional and regular income cash benefit without means-test or requirement has been discussed as far back as the 18th century.
Thinkers on the right are attracted to its simplicity, which contrasts with the current complex welfare state arrangements in most advanced economies, its minimalism and its low adverse effects on work incentives, since it is paid irrespective of labour market participation.
On the left, people emphasise its universalism and unconditionality which would reduce the gaps in coverage of current benefits and ensure labour is decommodified, thereby increasing the power of workers to bargain for better working conditions and wages.
Its detractors are similarly located across the ideological spectrum. Many liberal economists see UBI as prohibitively expensive and inefficient insofar as it directs resources to those who may not need them.
Others on the left see UBI as a dangerous legitimisation of capitalism and an implicit acceptance that not everyone will be provided a job. They also emphasise UBI’s limited ability to address all the social risks that individuals face in a market economy.
Finally, some trade unions, particularly in Bismarckian welfare regimes, oppose what they see as releasing employers of their social responsibility. Trade unions also voice concerns that this will reduce their institutional power which lies in their key role in managing the administration of social insurance benefits.
|Europe (including UK)||UK|
|GDP (purchasing power parity)||$19.18 trillion (2016 est.)||$2.788 trillion (2016 est.)|
|GDP (official exchange rates)||$16.27 trillion (2015 est.)||$2.65 trillion (2015 est.)|
|GDP growth||1.9% (2016 est.)||1.8% (2016 est.)|
|GDP – per capita (PPP)||$37,800 (2016 est.)||$42,500 (2016 est.)|
|industry share of GDP||25.50%||19.20%|
|Labour force||232.9 million||33.17 million (2016 est.)|
|Unemployment||9.5% (2015 est.)||5.1% (2016 est.)|
|Population below poverty line||9.80%||15% (2013 est.)|
|Budget surplus (+) or deficit (-)||-3% of GDP||-3.8% of GDP (2016 est.)|
|Public Debt||86.8% of GDP (2014)||92.2% of GDP (2016 est.)|
|Inflation rate||0.1% (2015 est.)||0.5% (2016 est.)|
|Population||515,052,778 (July 2016 est.)||64,430,428 (July 2016 est.)|
|65 years and over||19.1% (2016 est.)||17.90%|
|Life expectancy at birth||80.2 years||80.7 years|
|Hospital bed density||5.4 beds/1,000 population||2.9 beds/1,000 population (2011)|
|Infant mortality rate||4 deaths/1,000 live births||4.3 deaths/1,000 live births|
|Source: CIA world factbook [https://www.cia.gov/library/publications/the-world-factbook/]|
Obama was elected in 2008 during the height of the crisis with much expectations that he would improve the conditions of the least well-off in American society. As his term nears its end, I use the latest OECD data to assess how unemployed individuals fare now compared to both other developed countries and to when he started his term.
In a nutshell, I show that in all plausible scenarios, individuals in the initial phase of unemployment are worse off in the US than in a median OECD or EU country and their relative situation has gotten worse since 2007, especially if they are in the middle class.
The OECD has data on the net replacement rates for six family types in the initial phase of unemployment. The latest data available is 2014 so it is in principle plausible – though unlikely – that the situation has improved massively in the last two years and that this is not captured by my data. Note further the emphasis on the initial phase of unemployment: after a certain time in unemployment – which varies by country – unemployed lose eligibility to certain benefits (or experience falls in the replacement rate).
The OECD tax-benefit Model allows you to specify the marital situation of the family (single, one earner married couple, and two earners married couple) and whether they have children (in this case no children versus two children) for different levels of the average wage.
For simplicity I show the replacement rate for a case when the family does not qualify for cash housing assistance or social assistance in either the in-work or out-of-work situation. I also do not consider the case of earners with 150% of average wage.
Figure 1 shows the difference between the US and the EU/OECD average replacement rates in 2014. As an example consider the case of a single person with no children earning 67% of the average wage prior to becoming unemployed. In the US, the person would get 61% out of work income as a percentage of previous earnings equal to 67% of the average wage. The equivalent OECD median is 65% while the EU median is 68% so the gap between the US and the OECD median is 4 percentage points while it is 7 percentage points between the US and the EU.
Comparing different family and income situations reveals that the US is least generous compared to the OECD and EU median for ‘middle class’ (100% of average wages) families that are composed of lone parents with 2 children. The next biggest gap between the US and the OECD/EU median is for low income families with either one earner couple or a lone parent.
By contrast, low income families (67% of average wage) with two earners with or without two children would fare almost exactly the same in terms of replacement rate in the median OECD and EU country as in the US.
Figure 1: The difference between the US and the EU/OECD average replacement rates in 2014
In Figure 2, I show the 2014 cross-national variation in the replacement rate for a single earner with no children that does not qualify for cash housing assistance or social assistance and had previous earnings of 67% of average wage. This reveals that the US is not the worse country among developed countries (the worse is not surprisingly the UK – though note that the situation does not quite look as dire for the UK if the family qualifies for cash housing assistance). But it is located in the bottom half of the ranking.
Figure 2: 2014 replacement rate for a single earner with no children that does not qualify for cash housing assistance or social assistance and had previous earnings of 67% AW
In 2014, the average across all family types and both income situations for the US is 59% compared to 70% for the OECD median and 71% for the EU median. This represents a fall from 2007 where the average was 62% for the US, 60% for the OECD and 71% for the EU median.
Figure 3 shows how the gap between the US and the EU has evolved between 2007 and 2014 for different family-income scenarios. Positive values indicate that there has been an increase in the gap between what a person would get in a median EU country and what they would get in the US. Thus for instance, we see that the biggest increases in the gap has been for one earner married couple with no children that earned 100% of the average wage prior to becoming unemployed and a single person with no children also earning 100% of the average wage prior to becoming unemployed. The next biggest increase has occurred for a lone parent with two children.
Thus, over the Obama presidency, the welfare of vulnerable middle class families in the US relative to their counterpart in the Europe has gotten worse. This is a striking result given the significant retrenchment of European welfare states that has taken place in Europe between 2008 and 2014 (the period under consideration here).
Figure 3: The difference between the EU-US gap in 2007 and in 2014
While disappointing, the falling welfare of the unemployed in the US is not entirely surprising from a theoretical perspective. The welfare state literature makes clear that liberal welfare regimes’ structure (e.g. targeted means tested benefits) limit the popular support for generous welfare state benefits for the unemployed that are seen as particularly undeserving.
As Rehm brillantly discusses in his latest book “Risk inequality and Welfare state“, countries with concentrated risks of unemployment among low income workers are less likely to exhibit pro-welfare state cross-class coalitions. At the same time, the US type of capitalism limits the power of the unions while making it unlikely that employers will consent – in the words of Korpi – to more generous social policies (see Varieties of Capitalism literature).
As a result, where there is no clear efficiency imperative (e.g. Obamacare in the context of objective inefficiencies in the health care sector in the US), it is therefore difficult even for a left leaning government to undertake an expansion of welfare state policies.
How difficult is it to fire a worker in different countries?
To answer this question, most social scientists have created many indicators that capture the conditions, costs and uncertainty associated with firing an employee.
For instance the OECD Employment Protection Legislation (EPL) index measures “the procedures and costs involved in dismissing individuals or groups of workers and the procedures involved in hiring workers on fixed-term or temporary work agency contracts”
The determinants and consequences of EPL
This index is then used in statistical analysis to assess the impact of EPL on economic outcomes, such as unemployment, or to identify the determinants of EPL reforms, for instance partisanship.
The conventional wisdom is that EPL has adverse economic consequences (studies by IMF and OECD, Layard, Botero and others), but the stability of the findings to different specification has been contested (for instance see work by Baker, Avdagic and others).
Employment Protection Legislation: rules versus enforcement
For a long time a more obvious problem has been that legal restrictions on firing can only be expected to have any effects on labour market performance if the legislation is actually enforced on the ground.
The issue here is not so much that employment protection legislation might not enforced (which is likely) but more importantly that it might be enforced to varying degrees in different countries in ways that we cannot observed.
New database on enforcement
This shortcoming is now being partly addressed in recent research by Kanbur and Ronconi published in the Centre for Economic Policy Research.
In a shorter version of the paper they have published in VoX they explain how they created a new indicator of enforcement that combines both inspections and penalties.
Their results are interesting in at least two respects
Interpreting the figure: some country examples
The ranking should be interpreted as follows: countries which are lower on the scale have higher ranking and hence more protective institutions or more enforcement. Thus for instance, while Canada and Denmark have among the lowest ranking in de jure employment protection (they are not in the top 150 countries), they rank really high in terms of enforcement (in top 25). By contrast, France and Spain score high on EPL but do not rank well in terms of enforcement: their stringent regulations are not well-enforced compared to many other countries.
Figure: Enforcement and labour law
My latest working paper on the relationship between ageing and inflation has just come out as an LSE working paper. You can access it here.
And here is the abstract:
What explains the cross-national variation in inflation rates in developed countries? Previous literature has emphasised the role of ideas and institutions, and to a lesser extent interest groups, while leaving the role of electoral politics comparatively unexplored. This paper seeks to redress this neglect by focusing on one case where electoral politics matters for inflation: the share of the population above 65 years old in a country. I argue that countries with a larger share of elderly have lower inflation because older people are both more inflation averse and politically powerful, forcing governments to pursue lower inflation. I test my argument in three steps. First, logistic regression analysis of survey data confirms older people are more inflation averse. Second, panel data regression analysis of party manifesto data reveals that European countries with more old people have more economically orthodox political parties. Third, time series cross-section regression analyses demonstrate that the share of the elderly is negatively correlated with inflation in both a sample of 21 advanced OECD economies and a larger sample of 175 countries. Ageing may therefore push governments to adopt a low inflation regime.
This post was originally published in the Huffington post.
The recent Greek election has resulted, once again, in a coalition government between the far left Coalition of the Radical Left (SYRIZA) and the far right Independent Greeks (ANEL). What has attracted less media attention so far, however, is the striking result for the neo-Nazi Golden Dawn which increased its share of the vote from 6.28 to 6.99%, gaining 18 seats in a parliament of 300, and remaining third strongest party. This indicates that the Golden Dawn remains a considerable presence in Greek politics since its first entry in the Greek parliament in 2012. And, it is a striking result for a party that is not only extreme, violent, and espouses Nazi ideology, but is also currently on trial for maintaining a criminal organization. Only a couple of days prior to the election, the party’s leader publicly accepted “political responsibility” for the murder of left-wing activist Pavlos Fyssas.
But the rise and resilience of far right parties is not confined to Greece. While neo-Nazism is indeed a more isolated phenomenon, the far right more broadly- i.e. parties that centre their attention on nationalism and xenophobia – is becoming increasingly popular across Europe. In the 2014 European Parliament elections, four far right parties received more than 20% of the votes cast: Austria’s FPÖ, Denmark’s DF, Britain’s UKIP and the French FN. Several others received over 10% of the votes cast including the Dutch PVV, the True Finns, and Hungary’s Jobbik. A number of these parties are also faring quite well in their domestic electoral arenas, for instance the French FN in 2012, the Austrian FPÖ in 2013, and the DF in Denmark as well as UKIP in the UK in 2015.
The most popular explanation for the rise of the far right in Europe is the on-going economic crisis. This answer has both historical and theoretical appeal. Historically, the rise of Nazism in interwar Europe followed the 1929 major financial crash. Theoretically, economic crises are associated with the rise of the far right because the dispossessed are more likely to punish the mainstream and opt for extreme or anti-establishment parties.
But the crisis is, at best, only part of the story. Unemployment rates do not correlate with levels of far right support. While Greece, which does have high levels of unemployment and suffered greatly from the crisis, did experience the rise of the Golden Dawn, other countries that have suffered from the crisis including Spain, Portugal and Ireland have not experienced a similar rise: Spain 2000 and National Democracy (DN) have remained marginal in Spain, the same is the case for the Portuguese National Renovator Party (PNR), and there is no far right party in Ireland. On the other hand, countries that have not experienced the worst of the crisis and generally have lower levels of unemployment, such as Britain, France, and Denmark, are experiencing a rise in far right party support.
The problem with this explanation is therefore that it is not consistent with patterns of far right party performance across Europe. This is because it is missing a crucial piece of the puzzle: welfare state policies mitigating the risks and costs that an economic crisis imposes on individuals. Ironically, it seems that welfare cuts, employed to tackle Europe’s economic crisis, are to blame for a broader political crisis, where the far right is flourishing.
In other words, austerity breeds right-wing extremism and this why: The link between an economic crisis and far right support is the labour market insecurity experienced by the middle class. When a crisis hits, those who have a job fear that they will lose it. Those who don’t have a job (or those who do lose it) fear that they will have no safety net or alternative means of subsistence. The greater the risks and costs of unemployment arising from the crisis the greater the insecurity. And in turn, the greater the insecurity, the greater the likelihood for people to punish the mainstream and reward far right parties.
One reason is that these parties pledge to limit foreigners’ access to jobs, thus appearing to be responding to increasing insecurity. Another is that these parties’ authoritarian vision of order is appealing in a context where economic malaise is having a disorderly effect on people’s lives. Finally, far right populist rhetoric is appealing because mainstream parties take the bulk of the blame both for the crisis itself and for inadequate policy responses to it.
The welfare state, therefore, is the key to understanding the rise of the far right as well as its varied performance across Europe: The extent of insecurity that people experience as a result of the crisis is largely determined by how protective welfare state institutions are. People fear losing their jobs less when job dismissal regulations protect them from redundancy. And those who do lose their jobs suffer less from this loss when unemployment benefits are more generous. A rise in unemployment, therefore, is morel likely to lead to far right party support when job dismissal regulations are low and unemployment benefits not generous.
This helps explain what happened in Spain and Portugal where unemployment has increased but the far right has not emerged. Both countries have high unemployment benefit replacement rates, and job dismissal regulations for those in permanent contracts are also comparatively high. By contrast, Greece and the UK, which have seen their far right party support increase, have much lower replacement rates. The UK also has one of the lowest employment protection legislations in Western Europe.
Welfare state policies are the link between economic crisis, unemployment and far right party support. Welfare cuts have increased the insecurity of the European middle classes that are being hit by the economic crisis. This matters because of the implications it has for policy. By reversing austerity, which results in welfare cuts and increases insecurity, we can limit the appeal of right-wing extremism.
This piece is co-authored with Daphne Halikiopoulou. Daphne Halikiopoulou is Associate Professor in Comparative Politics at University of Reading. Tim Vlandas is Lecturer of Politics at University of Reading. This piece builds on their argument in their co-authored piece Risks, Costs and Labour Markets: Explaining Far Right-Wing Party Success in European Parliament Elections forthcoming in the Journal of Common Market Studies.