Category: Welfare state outcomes

Unions and democracy

Recent paper by Patrick Flavin and Benjamin Radcliff shows that (1) union members are more likely to vote than non-members and (2) people are more likely to vote in high union density countries…
Abstract
Despite a large literature on voter turnout around the world, our understanding of the role of labor union membership remains muddled. In this paper, we examine the relationship between union membership and voting. Using individual level International Social Science Program (ISSP) data from thirty-two countries, we find that union members are more likely to vote and that the substantive effect rivals that of other common predictors of voting. This relationship is also largely invariant across an array of demographic factors, indicating that unions tend to be “equal opportunity mobilizers.” We also find that unions have “spillover” effects: controlling for a variety of other factors, even non-union members are more likely to turn out to vote in countries with higher union densities. In sum, we find that labor unions have a consistent political influence across a wide set of countries.

Support the Basic Income Earth Network

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“About Basic Income
A basic income is an income unconditionally granted to all on an individual basis, without means test or work requirement. It is a form of minimum income guarantee that differs from those that now exist in various European countries in three important ways:
it is being paid to individuals rather than households;
it is paid irrespective of any income from other sources;
it is paid without requiring the performance of any work or the willingness to accept a job if offered.
Liberty and equality, efficiency and community, common ownership of the Earth and equal sharing in the benefits of technical progress, the flexibility of the labour market and the dignity of the poor, the fight against inhumane working conditions, against the desertification of the countryside and against interregional inequalities, the viability of cooperatives and the promotion of adult education, autonomy from bosses, husbands and bureaucrats, have all been invoked in its favour.
But it is the inability to tackle unemployment with conventional means that has led in the last decade or so to the idea being taken seriously throughout Europe by a growing number of scholars and organizations. Social policy and economic policy can no longer be conceived separately, and basic income is increasingly viewed as the only viable way of reconciling two of their respective central objectives: poverty relief and full employment.
There is a wide variety of proposals around. They differ according to the amounts involved, the source of funding, the nature and size of the reductions in other transfers, and along many other dimensions. As far as short-term proposals are concerned, however, the current discussion is focusing increasingly on so-called partial basic income schemes which would not be full substitutes for present guaranteed income schemes but would provide a low – and slowly increasing – basis to which other incomes, including the remaining social security benefits and means-tested guaranteed income supplements, could be added.
Many prominent European social scientists have now come out in favour of basic income – among them two Nobel laureates in economics. In a few countries some major politicians, including from parties in government, are also beginning to stick their necks out in support of it. At the same time, the relevant literature – on the economic, ethical, political and legal aspects – is gradually expanding and those promoting the idea, or just interested in it, in various European countries and across the world have started organizing into an active network” 

Are people unemployed because safety nets are too generous?

Brad Delong rebutes this claim: if people increasingly chose to become or remain unemployed because of (more) generous safety nets, what we should see is a bigger ‘choice set’ and more people quitting their jobs. 
What we see instead is that the unemployed feel more constrained, spend less and are more uncertain about the future in the US. Moreover, the number of people quitting their jobs has actually fallen since the beginning of the crisis…

Active labour market policies in the crisis

Good interview of Jochen Kluve. He argues that to target the problem of unemployment, we should first start by providing with job search assistance programs, loosely referred to as activation.

Some form of work Subsidy programs can then be appropriate, provided that displacement effects (the reduction or crowding out of regular employment elsewhere in the economy through competition in the goods market – p15, Simon Chapple, 1999) and substitution (“displacement within a firm which hires workers from an active labour market policy” – p8, ibid ) are not to large.

If that doesn’t work, providing the unemployed with training schemes may be appropriate, ideally on a fairly long term basis. In Kluve’s view, direct job creation in the not for profit sector or local government should be avoided as it engenders nefast effects. For instance, public employment schemes targeted at the young may fail to raise their human capital on the one hand, and on the other may lead municipalities to hire the unemployed instead of more qualified candidates.

Note however that this latter claim is at odds with some of the more recent macro-evaluation literature. For instance, Estevão (2003) finds that “direct subsidies to job creation were the most effective” for raising employment rates.

The role of actors in welfare state development

The role of political parties, unions and business in driving welfare state change is a contested issue in political economy. 
Recent work by Emmeneger and Marx (2011) challenges the notion that employers favoured higher protection of employment in Germany. This is important because Germany represents the ideal type of a coordinated market economy. The Varieties of Capitalism (Hall and Soskice, 2001) literature would therefore make us expect that employers had an important role in promoting higher jobs protection. This followed the functional needs of the firms to solve the coordination problem that surrounds investing in non-transferable/specific skills. This interest of the firm in developing welfare state policies is for instance historically apparent in a cross class alliance between certain firms and labour (see for instance Swenson 1991).
This follows in the footsteps of Korpi (2006) that argued that employers were at best passive in accepting new welfare state policies. In the traditional Power Resource Approach, labour strength is a key driver of welfare state development.
As important is Jensen’s (2011) contention that unions and left parties may have different social policy preferences. The former primarily favours labour market policies while the latter prefers familly and old age policies. Within the labour movement more generally, labour has been increasingly divided between insider s and outsiders (Rueda, 2007) and there has been a breakdown between high and low skill workers (Iversen and Soskice, 2009). While class politics is itself a contested issue (Weakliem, 2011), these divisions have led to a dualisation of welfare state policies (see Bruno Palier’s work).

Thus, there are multiple potential dividing lines in the actors that are purported to push for more welfare state policies. It will be interesting to analyse how the current economic and financial crisis is affecting the role actors can play in welfare state development.

The Socio economic determinants of labour market policies

For those interested in Active Labour Market Policies, check out the new paper by Barbara Vis “Under which conditions does spending on active labor market policies increase? An fsQCA analysis of 53 governments between 1985 and 2003”.

Abstract

This article examines the conditions under which governments increase spending on active labor market policies (ALMPs), as the European Union and the organization of economic co-operation and development recommend. Given that ALMPs are usually expensive and unlikely to win a government many votes, this study hypothesizes that an improving socio-economic situation is a necessary condition for increased spending. On the basis of the data of 53 governments from 18 established democracies between 1985 and 2003, the fuzzy-set qualitative comparative analysis shows that there are different combinations of conditions, or routes, toward activation and that an improving socio-economic situation is needed for each of them. Specifically, the analysis reveals that governments activate under decreasing unemployment combined with (1) trade openness, or (2) the absence of corporatism in the case of leftist governments, or (3) the presence of corporatism in the case of rightist governments. These findings advance our understanding of the politics of labor market reform.

Manufacturing and the welfare state

Rodrik on why deindustrialisation may be a problem…It is fair to say that the implications for the welfare state are not positive either. 
Politically, deindustrialisation removes one of the major constituency behind the expansion of the welfare state. It also makes it harder for trade unions to organise labour.
From an economic perspective, earlier literature had pointed out the role of industrialisation in the emergence of the welfare state. Limited unemployment makes it easier to introduce unemployment insurance. Productivity growth formed the basis for wage increases thereby expanding the revenues of governments.