Table Of ContentLabor Markets
and Social Security
Wage Costs, Social Security Financing
and Labor Market Reforms in Europe
Springer-Verlag Berlin Heidelberg GmbH
John T. Addison· Paul J. J. Welfens (Hrsg.)
Labor Markets
and Social Security
Wage Costs, Social Security Financing
and Labor Market Reforms in Europe
With 39 Figures
and 40 Tables
i
Springer
Professor Dr. Paul J. J. Welfens, University of Potsdam,
European Institute for International Economic Relations,
August-Bebel-Str. 89, 14482 Potsdam, Germany
Professor Dr. John T. Addison, John M. Olin Visiting Professor of Labor
Economics and Public Policy, Center for the Study of American Business,
Washington University in St. Louis, One Brookings Drive,
St. Louis, MO 63130-4899, USA
and
University of South Carolina, Department of Economics,
College of Business Administration, The H. William Close Building,
Columbia, SC 29208, USA
ISBN 978-3-662-03601-3 ISBN 978-3-662-03599-3 (eBook)
DOI 10.1007/978-3-662-03599-3
Library of Congress Cataloging-in-Publication Data
Labor markets and social security: wage costs, social security financing and labor
market reforms in Europe I John T. Addison, Paul J.J. Welfens (Hrsg.) p. cm. In
cludes index.
1. Manpower policy - Europe. 2. Social security - Europe. 3. Labor market - Europe.
4. Unemployment - Europe. 1. Addison, John T. II. Welfens, Paul J. J. HD5764.A6L275
1998 331.12'094-dc21 97-47707 CIP
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Introduction 1
by John T. Addison and Paul JJ Welfens
A. Structural Unemployment in Europe: A Bird's-Eye View 17
by Karl-Heinz Paque
1. Introduction 17
2. Stylised Facts and Evidence 17
3. Stylised Interpretations 29
3.1 Genesis of the Evil 29
3.2 Persistence of the Evil 31
3.3 Future of the Evil: Speculative Thoughts 35
4. Ideas on Policy 36
Comment: Manfred Teutemann 45
B. Alternative Subsidies for Low-Wage Employment 49
by Jurgen Jerger and Alexander Spermann
1. Introduction 49
2. Background 50
3. Comparing Different Tax and Transfer Systems 53
3.1 A Conceptual Framework 53
3.2 Labour Market Equilibrium in the Status Quo 57
3.3 Labour Market Effects of a Targeted NIT Solution 58
3.4 Alternative Reform Proposals 61
3.4.1 EITC 61
3.4.2 BTP 63
4. Conclusions 64
Comment: Doba Trabert 69
C. Job Security and Employment: A Comparative Analysis 75
by John T. Addison and Jean-Lue Grosso
1. Introduction 75
2. Data 76
3. Empirical Results 78
4. Interpretation and Concluding Remarks 81
Comment: Nils Bjorksten 87
VI Labor Markets and Social Security
D. Sectoral Employment Elasticities in Germany 91
by Klaus Lobbe
1. Introduction 91
2. Growth and Employment in a Long-Tenn Perspective -Some Simple
fu~ ~
2.1 The Position of the Federal Republic of Gennany in the
International Competitive Order ~
2.2 Changes of the Sectoral Structure in Western Gennany 98
2.3 European Comparisons of Sectoral Structure 102
3. International Comparison of Macroeconomic and Sectoral
Employment Thresholds 104
3.1 Fonnal Framework 104
3.2 Results for Selected Industrial Countries in Total 108
3.3 Results for Selected Sectors 111
3.3.1 ... in the Federal Republic of Gennany 111
3.3.2 ... on the European Level 114
4. Conclusions 117
Appendix 119
Comment: Hans Joachim Schalk 123
E. New Firms and Creating Employment 129
by David B. Audretsch
1. Introduction 129
2. The Job Generation Debate 130
2.1 Why Does It Matter? 130
2.2 The Evidence 132
2.3 Economic Welfare Implications 135
3. A Theory of Corporate Downsizing 136
4. A Theory of Entrepreneurship 144
5. Policy Implications 152
6. Conclusions 156
Comment: Joachim Wagner 167
Table a/Contents VII
F. Job Creation in the European Information Society 171
by Wolfgang Seufert
1. Infonnation Society and Employment -New Jobs or More Jobs? 171
2. The Infonnation Occupations and the Labour Force 174
3. Production ofinfonnation Goods and Sectoral Growth 176
4. ICT, Productivity Gains and Macroeconomic Growth 182
5. Summary 187
Comment: Paul J.J. Welfens 191
G. Maastricht -Implications of a Centralized Monetary and Currency
Policy for Employment in Europe 195
by Ansgar Belke
1. Introduction 195
2. European Monetary Union as an Instrument to Discipline Wage Policy? 198
3. European Monetary Union as an Impediment to More Employment? 201
3.1 Political Dependence of the European Central Bank? 202
3.2 Lack ofintegration in an Incentive-Orientated Political Union? 205
3.3 Lack of OperationalizatiQn and Ability to Carry Through the
Convergence Criteria? 207
3.4 Wage Levelling, Inelastic Labor Demand and Lack of the Exchange
Rate Instrument 210
4. Employment Impacts of Social and Political Union 215
4.1 Social Protocol 215
4.2 Employment Impacts of Social Union 220
4.3 Employment Impacts of Political Union 222
4.3.1 A European System of Fiscal Equalization 224
4.3.2 Employment Impacts of a European Financial Policy 225
5. Criticism of EMU by the Unions 228
6. Summary and Outlook 234
Comment: Thomas Rhein 247
H. Towards Full Employment and Growth in the European Union 251
by Paul J.J. Welfens
1. Introduction: Unemployment and Growth in a European Perspective 251
2. Labor Market Problems in the EU 253
2.1 Developments in West European Labor Markets 253
2.2 Causes and Types of Unemployment 255
VlII Labor Markets and Social Security
2.3 Barriers to Exit as Barriers to Entry 268
2.4 Theory of Full Employment 270
2.5 Degree of Centralized Bargaining, Intra-EU-Trade and the Share
ofInvestment Goods 276
2.6 Unemployment and Growth: Macroeconomic vs. Structural
Approaches 283
2.6.1 Macroeconomic Approach 284
2.6.2 Dynamic Two-Sector Approach 287
3. Policy Options for Growth and Full Employment 293
3.1 Reform of the Unemployment Insurance System 293
3.2 How to Achieve Economic Growth 296
4. Summary and Policy Conclusions 302
Appendix 304
Comment: Claus Schnabel 311
I. Employment and Wage Effects of Social Security Financing -An
Empirical Analysis of the West German Experience and some
Policy Simulations 315
by Viktor Steiner
1. Introduction 315
2. Previous Related Studies 317
3. Econometric Model 320
3.1 Specification of Wage and Employment Equations 321
3.1.1 Wage Equation 321
3.1.2 Labour Demand Equation 325
3.2 Estimation 326
4. Results 327
4.1 Integration Tests 327
4.2 Wage Equations 328
4.3 Labour Demand Equations 332
5. Policy Simulations 336
6. Conclusion 339
Appendix 341
Comment: Kristof Dascher 345
Table ofC ontents IX
J. Social Security Reforms in Europe 349
by Bent Greve
I. Introduction 349
2. Why a Crisis -and Will It Continue? 351
3. A Short Empirical Description of Historical Developments since 1980 353
4. Change in Labour Market Policies -a Qualitative Assessment 357
5. Change in Policies for the Elderly -Especially Pensions 360
6. Summing Up 363
K. Long-Term Aspects of Social Security Financing in Germany 371
by Stefan Dudey
1. Introduction 371
2. Some Short Explanations of the Model Used 371
3. Main Results of the Model 373
4. Return on Investment of Contributions to the Pension Scheme 375
5. Conclusion 377
Comment: Thomas Ehrich 381
List ofF igures 383
List of Tables 385
List ofC ontributors 387
Index 389
