Labor Markets and Social Security: Issues and Policy Options in the U.S. and Europe

405 Pages·2004·12.34 MB·English

by  John T. Addison

Labor Markets
and Social Security
Springer-Verlag Berlin Heidelberg GmbH
John T. Addison . Paul J. J. Welfens
Editors
Labor Markets
and Social Security
Issues and Poliey Options
in the V.S. and Europe
With 56 Figures
and 52 Tables
Second Edition
, Springer
Professor Dr. Peter Buxmann . Luis Martin Diaz
Freiberg University of Technology
Chair of Information Systems
LessingstraBe 45, 09596 Freiberg, Germany
Professor Dr. Wolfgang Konig . Markus Fricke
University of Frankfurt
Institute of Information Systems
MertonstraBe 17, 60054 Frankfurt, Germany
Dr. Franz Hollich
SAP AG . Global Custom Development Projects
Dr. Sascha Weber
SAP AG . Development GBU Manufacturing
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ISBN 978-3-642-53462-1 ISBN 978-3-540-24780-7 (eBook)
DOI 10.1007/978-3-540-24780-7
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Table of Contents
Introduction 1
John T Addison and Paul J.J. Welfens
A. International Trade and the Position of European Low Skilled Labour 13
Marion Jansen
1. Introduction 13
2. Trade Pattems in the European Vnion 14
3. Trade and the Demand for Low Skilled Labour 18
3.1 Trade with Countries Having Abundant Low Skilled Labour 19
3.2 Trade among Similar, Industrialised Countries 20
3.3 Empirical Evidence of the Effect of Trade on the Demand for Low
Skilled Labour 23
4. Trade and the Increased Substitutability of Workers across Borders 26
5. Trade and Investment in Skills 28
6. Summary and Perspectives 31
B. EU Enlargement, Migration and the Labour Market: A Tentative
Assessment 35
Karl Pichelmann
1. East-west Migration Flows: Setting the Stage 35
2. Enlargement Migration Scenarios for 2005-2010 40
3. A BriefLook Behind the Aggregate Numbers 51
4.Summary 54
C. Structural Unemployment in Europe: A Bird's-Eye View 57
Karl-Heinz Paque
1. Introduction 57
2. Stylised Facts and Evidence 57
3. Stylised Interpretations 67
3.1 Genesis ofthe Evil 68
3.2 Persistence of the Evil 69
3.3 Future of the Evil: Speculative Thoughts 72
4. Ideas on Policy 73
Comments on: Structural Unemployment in Europe -A Bird's-Eye View 79
Manfred Teutemann
D. Alternative Subsidies for Low-Wage Employment 83
Jiirgen Jerger and Alexander Spermann
1. Introduction 83
2. Background 84
3. Comparing Different Tax and Transfer Systems 87
VI Labor Markets and Social Security
3.1 A Conceptual Framework 87
3.2 Labour Market Equilibrium in the Status Quo 90
3.3 Labour Market Effects of a Targeted NIT Solution 91
3.4 Alternative Reform Proposals 94
3.4.1 EITC 94
3.4.2 BTP 95
4. Conc1usions 96
Comments on: Alternative Subsidies for Low-Wage Employment 101
Lioba Trabert
E. Short-and Long-Term Unemployment: A Discrete Duration Model
with Time-Varying Covariate Effects 105
iohn T. Addison and Pedro Portugal
1. Introduction 105
2. Model Specification 106
3. Data 108
4. Findings 110
5. Conc1usions 115
Appendix 116
F. Sectoral Employment Elasticities in Germany 119
Klaus LObbe
1. Introduction 119
2. Growth and Employment in a Long-Term Perspective -Some Simple
Findings 120
2.1 The Position of the Federal Republic of Germany in the International
Competitive Order 120
2.2 Changes of the Sectoral Structure in Western Germany 125
2.3 European Comparisons of Sectoral Structure 127
3. International Comparison of Macroeconomic and Sectoral Employment
Thresholds 130
3.1 Formal Framework 130
3.2 Results for Selected Industrial Countries in Total 132
3.3 Results for Selected Sectors 135
3.3.1 ... in the Federal Republic of Germany 135
3.3.2 ... on the European Level 138
4. Conclusions 141
Appendix 142
Comments on: Sectoral Employment Elasticities in Germany 145
Hans ioachim Schalk
Table of Contents VII
G. New Firms and Creating Employment 149
David B. Audretsch
1.lntroduction 149
2. The Job Generation Debate 150
2.1 Why Does It Matter? 150
2.2 The Evidence 151
2.3 Economic Welfare Implications 154
3. A Theory of Corporate Downsizing 155
4. A Theory of Entrepreneurship 161
5. Policy Implications 167
6. Conc1usions 171
Comments on: New Firms and Creating Employment 179
Joachim Wagner
H. Job Creation in the European Information Society 183
Wolfgang Seufert
1. Information Society and Employment -New Jobs or More Jobs? 183
2. The Information Occupations and the Labor Force 185
3. Production of Information Goods and Sectoral Growth 187
4. ICT, Productivity Gains and Macroeconomic Growth 192
5.Summary 196
Comments on: Job Creation in the European Information Society 199
Paul J.J. Welfens
1. Maastricht -Implications of a Centralized Monetary and Currency
Policy for Employment in Europe 203
Ansgar Belke
1.lntroduction 203
2. European Monetary Union as an Instrument to Discipline Wage Policy? 205
3. European Monetary Union as an Impediment to More Employment? 208
3.1 Political Dependence ofthe European Central Bank? 208
3.2 Lack of Integration in an Incentive-Orientated Political Union? 211
3.3 Lack of Operationalization and Ability to Carry Through the
Convergence Criteria? 213
3.4 Wage Leveling, Inelastic Labor Demand and Lack of the
Exchange Rate Instrument 215
4. Employment Impacts of Social and Politic al Union 218
4.1 Social Protocol 218
4.2 Employment Impacts of Social Union 223
4.3 Employment Impacts of Political Union 225
4.3.1 A European System of Fiscal Equalization 226
4.3.2 Employment Impacts of a European Financial Policy 227
VlIJ Labor Markets and Social Security
5. Criticism of EMU by the Unions 229
6. Summary and Outlook 233
Comments on: Maastricht -Implications of a Centralized Monetary and
Currency Policy for Employment in Europe 243
Thomas Rhein
J. Towards Full Employment and Growth in the European Union 247
Paul J.J. Welfens
1. Introduction: Unemployment and Growth in a European Perspective 247
2. Labor Market Problems in the EU 249
2.1 Deve10pments in West European Labor Markets 249
2.2 Causes and Types of Unemployment 250
2.3 Barriers to Exit as Barriers to Entry 262
2.4 Theory of Full Employment 264
2.5 Degree of Centralized Bargaining, Intra-EU -Trade and the Share of
Investment Goods 267
2.6 Unemployment and Growth: Macroeconomic vs. Structural
Approaches 274
2.6.1 Macroeconomic Approach 274
2.6.2 Dynamic Two-Sector Approach 276
3. Policy Options for Growth and Full Employment 281
3.1 Reform ofthe Unemployment Insurance System 282
3.2 How to Achieve Economic Growth 284
4. Summary and Policy Conclusions 288
Appendix 1: Link Between Wage Setting and Future Income 291
Appendix 2: Rate of Product Innovation and the Non-tradable Sector 292
Appendix 3 293
Appendix 4 294
Appendix 5 295
Comments on: Towards Full Employment and Growth in the European
Union 299
Claus Schnabel
K. Optimal Unemployment Insurance in a Federation 303
Helge Sanner
1. Introduction 303
2. Formal Analysis 304
3. Specification and Comparison of the Models 309
4. Conclusions 314
Appendix 316
Table of Contents IX
L. Employment and Wage EtTects of Social Security Financing -
An Empirical Analysis of the West German Experience and
Some Policy Simulations 319
Viktor Steiner
1.lntroduction 319
2. Previous Related Studies 320
3. Econometric Model 323
3.1 Specification ofWage and Employment Equations 324
3.1.1 Wage Equation 324
3.1.2 Labour Demand Equation 327
3.2 Estimation 328
4. Results 329
4.1 Integration Tests 329
4.2 Wage Equations 330
4.3 Labour Demand Equations 333
5. Policy Simulations 336
6. Conclusion 339
Data Appendix 340
M. Economic EtTects of Continuous Training 345
Lutz BellmannlUte Leber
1. Introduction 345
2. Eamings Inequality and Unemployment in the U.S. and in Europe and
the Role of Continuous Training 346
2.1 Relative Shifts in Demand and Supply of Labor 346
2.2 Institutions and Their Effects on Eamings Distribution and
Unemployment 347
2.3 Company Training 349
2.4 Public Training 350
3. Training and Unemployment -The Macroeconomic Level 351
4. Training, Income and Employment -The Microeconomic Level 354
5. Continuous Training and Firms' Performance 356
6. Conclusions 359
Appendix 361
N. Social Security Reforms in Europe 367
BentGreve
1. Introduction 367
2. Why a Crisis -And Will It Continue? 368
3. A Short Empirical Description of Historical Developments since 1980 371
4. Change in Labour Market Policies -A Qualitative Assessment 374
5. Change in Policies for the Elderly -Especially Pensions 376
6. Summing Up 378
x
Labor Markets and Social Security
List of Figures 383
List of Tables 385
List of Contributors 387
Index 389