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Reprint of "The Scandinavian model-An interpretation"
Abstract
The small open economies in Scandinavia have for long periods had high work effort, small wage differentials, high productivity, and a generous welfare state. To understand how this might be an economic and political equilibrium we combine models of collective wage bargaining, creative job destruction, and welfare spending. The two-tier system of wage bargaining provides microeconomic efficiency and wage compression. Combined with a vintage approach to the process of creative destruction we show how wage compression fuels investments, enhances average productivity and increases the mean wage by allocating more of the work force to the most modern activities. Finally, we show how the political support of welfare spending is fueled by both a higher mean wage and a lower wage dispersion. (C) 2015 Published by Elsevier B.V.
... Their conclusion is that the Nordic economies do not produce a more egalitarian distribution of material wealth than, for example, some horticultural and forager economies, although they show a higher level of intergenerational and social mobility. Barth et al. (2014Barth et al. ( , 2015) provide a theoretical overview of the main political and economic features of the Nordic open economies, summarizing and putting together results from previous economic research on the issue: Moene et al. (1993), Moene and Wallerstein (1997) and Barth et al. (2013). This research follows Barth et al. (2014) in representing the Nordic model as a set of three distinct but interconnected mechanisms. ...
... Barth et al. (2014Barth et al. ( , 2015) provide a theoretical overview of the main political and economic features of the Nordic open economies, summarizing and putting together results from previous economic research on the issue: Moene et al. (1993), Moene and Wallerstein (1997) and Barth et al. (2013). This research follows Barth et al. (2014) in representing the Nordic model as a set of three distinct but interconnected mechanisms. ...
... The second contribution of this study looks at another key element of the Scandinavian model framework analyzed in Barth et al. (2014): the political economy of public welfare spending. How did the oil bonanza affect the relative growth of welfare spending in Norway compared to the other Nordic countries? ...
This paper aims at highlighting the effects of large natural resource endowments on the institutions of the so-called Scandinavian or Nordic model, through a comparative quantitative case study. Focusing on two key features of the Scandinavian model, namely (a) low income inequality and (b) high welfare spending, this study presents evidence on the shocks to these features for Norway after the country became one of the world’s largest oil exporters. A synthetic control unit constructed by weighting Nordic countries provides the most reliable comparison unit to estimate the comparative effects constituting the paper’s twofold contribution. First, the resource windfall did not contribute to significantly higher top income shares. Second, resource revenues contributed to finance the steadily increasing gap between Norway and other Nordic countries in the degree of welfare generosity.
... rial wealth inequality with respect to a large group of economies over the past three thousand years. Their conclusion is that the Nordic economies do not produce a more egalitarian distribution of material wealth than, for example, some horticultural and forager economies, although they show a higher level of intergenerational and social mobility.Barth et al. (2014Barth et al. ( , 2015) provide a theoretical overview of the main political and economic features of the Nordic open economies, summarizing and putting together results from previous economic research on the issue:Moene et al. (1993), Moene and Wallerstein (1997) andBarth et al. (2013). This research followsBarth et al. (2014)in represen ...
... Their conclusion is that the Nordic economies do not produce a more egalitarian distribution of material wealth than, for example, some horticultural and forager economies, although they show a higher level of intergenerational and social mobility.Barth et al. (2014Barth et al. ( , 2015) provide a theoretical overview of the main political and economic features of the Nordic open economies, summarizing and putting together results from previous economic research on the issue:Moene et al. (1993), Moene and Wallerstein (1997) andBarth et al. (2013). This research followsBarth et al. (2014)in representing the Nordic model as a set of three distinct but interconnected mechanisms. These are: (i) collective bargaining which leads to labour wage compression (i.e., high minimum wages and low maximum wages) through a combination of central wage negotiations and local wage negotiations at the …rm level; (ii) high labour productivity which, combined with wage compression, stimulates high private investments and creation of new highly productive enterprises; (iii) political support for large ratios of public welfare spending to GDP. ...
... Second, the treatment boosted labour productivity, regardless of the increased income inequality. This covariation of increased inequality and boosted productivity after the shock is not predicted by the theoretical model inBarth et al. (2014), which implies that a lower degree of wage compression would slow down the dynamic process of creative destruction and hence lead to lower labour productivity in the end. ...
... First, the resource mobilization approach is primarily associated with Walter Korpi (1983), Gøsta Esping-Andersen (1990, and a group of scholars identifying themselves as political economists or welfare state researchers (e.g. Barth et al., 2014;Dølvik et al., 2014). Esping-Andersen's introduction of the distinction between liberal, conservative, and (Nordic) social democratic welfare regimes is a key event in the history of the Nordic model, since it was one of the first systematic comparisons across nation-states to identify a Nordic cluster. ...
... According to this model, business actors and employer associations have power based on the control of companies, but workers or farmers gain power through mobilization in associations or political parties, as well as in elections. Power in numbers grants parliamentary power, which means labor can introduce social legislation, pensions, Barth et al. (2014) Stråth and Sørensen (1997) Thorkildsen (1997) Trägårdh (1997 Witoszek ( ) Petersen (2018 Rokkan ( Madsen in this volume). Furthermore, the development of the Nordic universal welfare states 3 was driven by strong left parties in alliance with the trade union movement. ...
... El modelo escandinavo a decir de Barth et al. (2014) en lo económico y político denota características bien definidas como son: pequeñas diferencias salariales, altos niveles de productividad y un amplio nivel de bienestar ¿cómo se logra esto?, básicamente a decir de los autores es una combinación de tres mecanismos, modelos de fijación salarial colectivos, inversiones capitalistas y gasto en asistencia social. ...
... El gasto público si bien genera redistibución del ingreso, la idea es que ofrezca un estado de bienestar en el cual las prestaciones sociales son generosas con muchos ganadores y pocos perdedores. Un elemento central para que funcione el estado de bienestar de acuerdo con Barth et al. (2014) es la distribución salarial. ...
Ante la pregunta directa sobre la función que deben tener los impuestos la respuesta parece obvia: la función de los impuestos es servir como canal de financiamiento para la realización del gasto público. Sin embargo, las respuestas obvias no siempre son adecuadas, correctas o suficientes.
La función de los impuestos por una parte podría ser tan amplia y diversa como la estructura del pensamiento fiscal, (teoría fiscal) a la cual se esté recurriendo, lo permita y por supuesto también el contexto puede tener una gran influencia en la perspectiva que se pueda tener. Cuando teoría y contexto se alinean, las respuestas comienzan a ser obvias y en el caso de los impuestos su función parece ser restricta al financiamiento del gasto.
Cuando una teoría pugna por la sanidad de las finanzas públicas, lo que hace es restringir las fuentes de financiamiento del Estado únicamente a los impuestos. Lo que implica que los flujos de egresos del Gobierno están determinados por los flujos de ingreso que devienen principalmente de los impuestos .
Pero ¿qué pasa con las necesidades legítimas de la población?, ¿qué pasa con la responsabilidad del Estado hacia el soberano? La relación del Estado con el Soberano implica el atender necesidades mediante acciones de gasto para las cuales, si se considera necesario y no se contraponen con la atención de las necesidades de la sociedad, podrían ser cubiertas con impuestos. Lo que implicaría que los flujos de gasto determinarían en cierta medida los flujos de ingreso.
¿Qué se puede esperar del flujo de ingresos? Por una parte, que sea suficiente para mantener finanzas públicas sustentables sin que ello limite la acción del Estado para proporcionar a la sociedad todos los medios necesarios que se requieran para su desarrollo, generando movilidad social y por la otra, que tenga capacidad para propiciar la distribución del ingreso.
... The incidence of formal, company-provided training (Acemoglu and Pischke, 1999; Busemeyer and Trampusch, 2012) is higher in continental European and Nordic countries, where bargaining centralization and redistribution are higher, than in the US and other Anglo-Saxon economies. Scandinavian countries in particular are well known for having not only higher levels of redistribution, but also smaller wage differentials and the highest levels of wage-setting centralization (Barth, Moene and Willumsen, 2014). Compressed wage differentials are also associated with increases in productivity (Hibbs and Locking, 2000; Barth, Moene and Willumsen, 2014) and are not only (or even) a reflection of a compressed skill distribution (Blau and Kahn, 1996; Björklund and Freeman, 1997 ). ...
... Scandinavian countries in particular are well known for having not only higher levels of redistribution, but also smaller wage differentials and the highest levels of wage-setting centralization (Barth, Moene and Willumsen, 2014). Compressed wage differentials are also associated with increases in productivity (Hibbs and Locking, 2000; Barth, Moene and Willumsen, 2014) and are not only (or even) a reflection of a compressed skill distribution (Blau and Kahn, 1996; Björklund and Freeman, 1997 ). There is evidence of a positive effect of wage-setting centralization on firm-sponsored training. ...
In the median-voter model of redistributive voting, an increase in the skewness of the in- come distribution will lead to more redistribution. Skewness is almost always assumed to be identical to inequality. But this will only be true under specific assumptions, and it is possible for an increase in inequality to be associated with a decrease in skewness. In general then, the relationship between inequality and skewness—and therefore redistribution—is ambiguous. This paper resolves this indeterminacy by introducing labor market frictions and labor market institutions into a redistributive voting framework. Under specific conditions, labor market institutions will lower inequality, but increase skewness—and therefore redistribution. This novel result resolves a “paradox” of redistribution, challenges the prevailing interpretation of the median-voter model, and reconciles the empirical data with the basic logic of that model.
... Our main analyses are based on data from Finland and Norway. These are both social democratic welfare states 55 that fit the 'Scandinavian model' of education for all 56 . Compared to other wealthy nations, income inequality is low and access to education is less restricted by economic barriers. ...
The choice of a field of study is a significant decision influenced by a complex interplay of individual traits, interests, and contextual factors. Little is known about the genetic architecture of educational fields. Genetic methods make it possible to explore common influences on different field specialisations. First, we conducted genome-wide association study (GWAS) meta-analyses of 10 broad fields of education using population-wide administrative data from Finland and Norway (FinnGen and MoBa; total n=463,134). Measured genetic differences were associated with fields of study (17 independent genome-wide significant lead SNPs across 10 fields GWAS). SNP-based heritability estimates were 7% on average. Polygenic indices (PGIs) based on our GWAS results were significantly associated with their respective fields in Lifelines, an independent Dutch cohort, for 7 out of 10 fields (p<0.005; n=36,373). Second, we detected overlapping genetic influences on different field specialisations, summarised by a Technical versus Social trait (10 independent genome-wide significant lead SNP associations), and a second Creative versus Conformist trait (3 independent genome-wide significant lead SNPs). Technical versus Social tendencies are genetically correlated with personality traits Extraversion and Agreeableness, and Creative versus Conformist tendencies are genetically correlated with Openness to Experience and Occupational Creativity. Third, results were robust to controls for stratification, both in GWA analyses adjusting for birthplace and parents’ fields and in within-family polygenic index analyses in the Lifelines (n=14,767). Weaving together genetics, complex traits, and contexts, we create a fuller picture of the underpinnings of educational qualifications, shifting the focus of social science genomics from the conventional hierarchy of attainments towards multidimensional tendencies and interests. We discuss socially mediated mechanisms by which genetic associations with fields of study arise.
... However, there is a high risk of harming vulnerable citizens based on a failing scientific and professional basis ). An OECD report have shown that Norway would have higher economic growth if income were distributed more equitably (OECD, 2015), and countries in the OECD with the most generous social insurance systems have the highest employment rates (Barth et al., 2015). Countries spending more money on welfare have often had higher economic growth during the economic downturn than countries that reduce welfare benefits (Stuckler and Basu, 2013). ...
... Først og fremst gjennom at samarbeidsmodellen og arbeidslivsmodellen på hver sin måte bidrar til å gjøre norske virksomheter konkurransedyktige, noe som er viktig for finansieringen av velferdsstaten. Men også ved at resultatet fra modellen for lønnsdannelse, nemlig høye inntekter kombinert med en sammenpresset lønnsstruktur, kan bidra til økt politisk støtte til velferdsstaten (Barth, Moene & Willumsen, 2014;Barth & Moene, 2016). ...
Vi vet lite om hvordan arbeidslivet ser ut om 30 år. Likevel er det en del utviklingstrekk som har gjort seg gjeldende de senere årene og som det kan være grunn til å tro vil forsterke seg i årene framover. Overordnet handler dette blant annet om en økende globalisering, automatisering og autonome systemer og nye måter å organisere arbeid og verdikjeder på. Mer konkret ser vi raskere og større omstillingsprosesser, løsere arbeidsmarkedstilknytninger blant arbeidstakere og økende tjenesteproduksjon. Gjennom bidrag fra en rekke forskere og kommentarer fra partene i arbeidslivet ser vi i denne boken på hvilke konsekvenser slike utviklingstrekk kan få for norsk arbeidsliv, hvordan vi best kan forberede oss på endringer som kommer, og hvilke nye muligheter som kan oppstå. Hvilke nye krav og utfordringer ser vi for arbeidstakere og bedrifter, og hvordan kan vi sikre gode arbeidsbetingelser og videre konkurransekraft framover?
... Initial-year real GDP per capita was also included as a predictor. The details of this method are presented in Appendix I. 9. Barth, Moene, and Willumsen (2014) 10. My colleague Pål Thonstad Sandvik in the NTNU history department helped me get the exact description of this union straight. ...
The use of residential Photovoltaic-Storage systems may produce large benefits to owners and has expanded rapidly in recent years. Nonetheless, large uncertainties regarding the profitability of these systems make it necessary to incorporate flexibilities in their economic evaluations. This paper offers a new method to evaluate the compound flexibility of both the option of delaying investments and the option of further expanding the capacity of solar photovoltaic modules and batteries during the investment horizon. Flexibility is modeled as a compound real option, whose value is computed using a novel method that we call Compound Least Squares Monte Carlo (CLSM). The model is applied to the investment decisions associated to a residential Photovoltaic-Storage system. Results suggest that investors should use the proposed CLSM method in the economic valuation of multi-stage projects, since considering only a single flexibility could promote sub-optimal decisions. Moreover, in our case study, we show that it is optimal to break the investment down into two steps or more in 36% of future scenarios, on average.
... Initial-year real GDP per capita was also included as a predictor. The details of this method are presented in Appendix I. 9. Barth, Moene, and Willumsen (2014) 10. My colleague Pål Thonstad Sandvik in the NTNU history department helped me get the exact description of this union straight. ...
Norway’s famed success against the Dutch disease did not extend to the petroleum investment boom of 2000-19. This paper takes a fresh look at the post-2000 data and shifts the focus from quantities and productivity to product prices and wages.Sweden, which is used as the control, had similar developments for real GDP and productivity, but mainland Norway outpaced Sweden in terms of product prices and wages, far in excess of the corresponding divergence of consumer prices. This real appreciation is explained as a result of new demand pressure from oil companies with a strong home bias. It also implies that about half of the resource rent, all of which was to be appropriated by the government, leaked to the private sector.Thus, rent management has not been nearly as effective as claimed. And the real appreciation is likely to cause major adjustment problems once the resource boom ends.
... However, there is a high risk of harming vulnerable citizens based on a failing scientific and professional basis (Prilleltensky, 2020). An OECD report have shown that Norway would have higher economic growth if income were distributed more equitably (OECD, 2015), and countries in the OECD with the most generous social insurance systems have the highest employment rates (Barth et al., 2015). Countries spending more money on welfare have often had higher economic growth during the economic downturn than countries that reduce welfare benefits (Stuckler and Basu, 2013). ...
The dominant political ideology of recent decades, neoliberalism, have resulted in diminished sense of mattering for several groups in the society, not at least people outside the labor market. This has left its mark on vocational rehabilitation programs in welfare states like Norway. Higher requirements shall be set for benefit recipients, and compulsory work are more often applied. The problem with this policy is that it suggests that benefit recipients have a guilt to make up for and are themselves to blame for the unemployment. However, the majority of people in need for vocational rehabilitation, have had poor living conditions since childhood, and have failed in education and employment for or reasons they have no control over. They often do not feel valued and have a lot of experience with not being able to add value. The problem with blaming the victims, is that it reinforces their sense of worthlessness, and thus reduces their ability to believe that they can contribute with something of value. In this way, the policy becomes counterproductive. Some even respond to these humiliating pressures by becoming more depressive or aggressive. To make vocational rehabilitation programs effective, we must make sure that everyone in need for it feel valued, we must align the political, scientific, and professional basis for welfare service politics thereafter. We must balance adding value to self with the opportunity to adding value to others, work and community. Mattering is suggested as a political, scientific, and professional basis for welfare services.
... Hirschman (1970) and Freeman and Medoff (1984) argue that unions are associated with both efficiency increasing behavior by exerting collective voice, and traditional efficiency reducing behavior through rent-seeking. Barth et al. (2014) argue that strong trade unions and coordinated wage bargaining combined with high welfare spending and social security safety nets lead to better macroeconomic performance, high employment rates and sustained long-run economic growth as evidenced by economic development in the Scandinavian countries. Thus, the sign of the association between the employment-skill gradient and trade union strength and collective bargaining institutions is an empirical question. ...
Hanushek et al (2015, ‘Returns to Skills Around the World: Evidence from PIAAC’, European Economic Review 73: 103) find a weak wage–skill relationship in countries with limited skill reward possibilities due to high union density, strict employment protection, and large public sector. If these factors also restrict employment possibilities and the incentives to join the labor market, a possible mirror image of the weak wage–skill relationship is a steeper employment–skill gradient. We use PIAAC data to estimate the employment–skill association, and the results for the whole sample of individuals give some indication that the employment–skill gradient is steeper in countries with strict employment rules and centralized bargaining. Our results for subgroups show imprecisely estimated employment–skill gradients for immigrants. For individuals with poor health conditions and low formal education, the estimated gradient is somewhat higher than in the whole sample in countries with high bargaining coverage, a large public sector, and centralized collective bargaining systems.
... if skattbreytingar sem leiða til aukins vinnuframboðs einstaklinga annars vegar og svo tilfaersluáhrifin hins vegar sem draga úr vinnuframboði þeirra. Hagrannsóknir gefa ekki skýr svör um þetta. Norðurlandaþjóðirnar til að mynda vinna ekkert minna en aðrar þjóðir þrátt fyrir háa skatta. Sjá t.d. Axel Hall (2015), Axel Hall og Gylfa Zoega (2015) og Barth o.fl. (2014). Þá sýna rannsóknir sem eru einskorðaðar við einstök lönd að viðbrögð við skattabreytingum fara mjög eftir því hvaða tekju-, aldurs-og þjóðfélagshóp framteljandinn tilheyrir sjá t.d. Blundell og MaCurdy (1999). Það er því óljóst hversu mikil fórnarskipti eru milli áhrifa skattlagningar á skilvirkni í efnahagslífinu og jafnaðar. ...
Í þessari grein er markmiðið að lýsa núverandi skattkerfi tekjuskatts sem hefur verið við lýði frá upptöku staðgreiðslunnar 1988. Hér er kerfið greint, eiginleikum þess lýst og það að einhverju leyti sett í norrænt samhengi. Til að auðvelda umfjöllun eru settar fram formlegar skilgreiningar á skattbyrði og jaðarsköttum. Mælikvarðar á jöfnun skattkerfis eru ennfremur settir fram. Þegar litið er yfir allt tímabil staðgreiðslunnar sést að tengsl persónuafsláttar við vísitölu neysluverðs á tímum hækkunar kaupmáttar hafa aukið meira skattbyrði hjá hinum tekjulægri en þeim sem hafa hærri tekjur, sem á móti voru með hærri skattbyrði fyrir. Þessi þróun er hér nefnd raunskattskrið og langtímaþróun í þessu efni hefur yfirgnæft aðra hluta staðgreiðslukerfisins og greiðendum tekjuskatts hefur fjölgað. Framangreindar breytingar hafa verið umdeildar og fræðimenn m.a. tekist á um þær. Hér er þróuninni lýst án þess að leitast við að leggja dóm á þá pólitísku vegferð sem hefur verið farin eða vangaveltur um aðrar leiðir mögulegar hingað til. Rauði þráðurinn hefur verið þróun skattleysismarka og persónuafsláttar. Kerfi með framangreindri þróun þarf að endurstilla reglulega standi vilji til að viðhalda lóðréttri jöfnun í kerfinu. Það kallar á stefnumótun um þrep (stig og fjölda), mörk þrepa (t.a.m. skattleysismörk) og þróun markanna yfir tíma. Í þessari grein er farið yfir þá valkosti sem stjórnvöld hafa sett fram varðandi breytingar á skattkerfinu og niðurstaða þeirrar stefnumörkunar greind með áhrifum á jöfnun í kerfi tekjuskatts.
... Den koordinerte lønnsdannelsen i Norge, der både ledigheten og lønn(sforskjeller) holdes nede (Barth, Moene & Willumsen, 2014;NOU 2013:13), er på generelt grunnlag nokså ulik frimarkedsmodellen som ligger til grunn for lukningsteori, der enhver regulering betraktes som «kunstige restriksjoner» på prisen på arbeidskraft (Bol & Weeden, 2014). Selv om det er vist at noen former for lukning kan forklare noe av økningen i lønnsforskjeller i Norge (Helland, Bol & Drage, 2017), er det grunn til å sette spørsmålstegn ved om monopolrente her opptrer i ren form. ...
Sammendrag
Spørsmålet om profesjoner er drevet av egeninteresse eller av
hensynet til samfunn og klienters beste, er en grunnleggende kontrovers
i profesjonsteori og arbeidslivssosiologi. Artikkelen går inn i
dette emnet med utgangspunkt i Webers teori om yrkeslukning og det
som fra et slikt synspunkt framstår som et paradoks: at lærerne
– en yrkesgruppe med uttalte profesjonsambisjoner – motsetter seg
økte adgangsbegrensninger til yrket ved å si nei til sertifisering
og økte karakterkrav i matematikk. I en analyse av Utdanningsforbundets
begrunnelser og motiv i tre saker som angår lukning av læreryrket
(obligatorisk masterutdanning, sertifisering og karakterkrav), viser
jeg at paradokset ikke primært skyldes en inkonsekvent politikk
fra Utdanningsforbundets side. Artikkelen argumenterer for at profesjoner
ikke bare bør forstås som faglige karteller allmennheten bør beskyttes
mot, men som verdi- og kulturbærende faggrupper som legitimt forsvarer
egen autonomi mot økt politisk styring. Avslutningsvis diskuteres
forhold i det norske arbeidslivet som kan gjøre analysen relevant
ut over dette enkeltcaset, og i tillegg impliserer at teorier om
profesjoner bør ta opp i seg to viktige forhold: at profesjonalisering
skjer i relasjon til styring ovenfra, og i dag primært foregår blant
tjenesteytere i offentlig sektor.
... The multilevel collaboration has over recent decades reduced the scope of industrial conflict, prevented uncontrolled wage growth and stimulated the productivity and restructuring of enterprises. It is a common understanding across the dividing line between employers and employees that the Norwegian industrial relations system has been beneficial for the economy (Gulbrandsen et al., 2002;Barth, Moene, & Willumsen, 2014). In a separate analysis not shown here the business leaders participating in the Leadership Study 2015 expressed strong support for the cooperation between the state and the partners in the labour market. ...
... 1. Establishing country-level coordinated systems of wage bargaining that counter undesired increases in the dispersion of wage and productivity in the context of slowing productivity (OECD, 2016a); as the experience of Scandinavian countries shows, a "social contract" based on a more equitable distribution of market incomes and strong R&D investment can combine equity, inclusiveness and fast technological modernization, hence reviving productivity while ensuring a better distribution of its dividends (Agell and Lommerud, 1993;Moene and Wallerstein 1997;Barth et al., 2014;Atkinson, 2015;IPSP 2018, Chapter 8). ...
The authors propose a policy compact to achieve more inclusive growth in G20 countries so that economic growth regains the ultimate sense of improving all people’s lives. Guiding principles are: 1) prosperity is not just about income but about all relevant outcomes of well-being and capabilities to overcome the initial social disadvantage; 2) it is also about including people in participatory decision-making to enhance their dignity and control over their lives; 3) excluding people from reaping the benefits of growth will thwart social cohesion and well-being; 4) integrated policy approaches are needed to achieve inclusive growth, across policy domains and between national and global actions, including responsible management of migratory movements. Concrete policy actions are described that span education, labor, fiscal instruments, public and private governance.
... Gender equality and women'sp articipation in work are underlined as key values. This wayofo rganizing society has been termed the Nordic or Scandinavian model (Barth, Moene, and Willumsen 2015;H ilson 2008). ...
The Scandinavian welfare societies depend on strong states to provide public services and to redistribute income. Scandinavians enjoy comprehensive welfare systems that offer citizens social security within open economies. Scandinavia combines international market capitalism with government regulation. The political-economic crisis in Europe influences Scandinavia as well, with pressure from globalization and immigration, and new political divisions that are articulated by right-wing populism. The Scandinavian countries are built on egalitarian values and practices and the level of trust between people is high. However, the countries are finding that these egalitarian values also have unintended, problematic consequences, especially as these once relatively homogenous societies experience growing diversity. Today, there are peculiar contrasts in the Scandinavian cultural-religious landscape, between old churches with large majorities of the population as members, and levels of secularity in Scandinavian societies that position the region as the most secular corner of the world.
... This conspicuous contradiction pro- vides a need of more in-depth analyses. Two questions that arise are why some immigrants become employed but others not and what is the effect of the relatively low dispersion in Norwegian wages, that is, that unskilled workers obtain relatively high wages whereas high- skilled workers obtain relatively low wages as compared to many other Western countries [9]. With such a wage structure, there has been some worry that Norway is more attractive to low-skilled workers than to high-skilled workers when it comes to the composition of immi- gration and emigration. ...
We consider immigrants living in Norway and their behavior with respect to mobility. Using cross-sectional data, we employ a trinomial logit model. An immigrant may (i) move to another centrality level, (ii) emigrate, or (iii) stay at the same centrality level as in the previous period. We carry out separate estimations for eight different groups, brought about combining four centrality levels with two genders. To assess the effect of different explanatory variables related to (i) duration of residence in Norway, (ii) labor market status, (iii) reason for immigration, (iv) the extent of education and (v) family size and composition, we calculate marginal effects. In line with earlier results, we obtain that longer duration of residence tends to decrease the probability of emigration and that immigrants who have stated escape as the reason for immigration to Norway tends to have lower probabilities for emigration than those who have stated work as the reason.
The individual may choose between three alternatives (relating to their ability to move): (i) internal migration, (ii) emigration and (iii) staying at the same centrality level. Consider the dummy variable Y1i(Table 6 in Appendix). It takes on the value 1 if the individual migrates from one centrality level in Norway to another centrality level in Norway and the value 0 if the immigrant stays at the same centrality level. Next, we have the dummy variable Y2i. This variable takes on the value 1 if the individual emigrates and otherwise the value 0. The probability of these two binary variables being equal to 1 is given by
Introducción: “Folkhemmet” es una metáfora de una sociedad con un sistema de bienestar social avanzado, asociada principalmente con el Partido Socialdemócrata de Suecia y Per Albin Hansson, quien introdujo el concepto en 1928. Metodología: El estudio examina cómo el término “folkhemmet” ha sido utilizado y reinterpretado, especialmente en el contexto del período entre 1945 y 1960, conocido como el “período folkhem”, cuando se construyeron miles de viviendas en Suecia. Resultados: Durante el “período folkhem”, Suecia experimentó una expansión significativa de la vivienda y el bienestar social. Sin embargo, en años recientes, la derecha radical ha reinterpretado el concepto de “folkhem” como un objetivo ideológico para construir un "hogar del pueblo" moderno, promoviendo una política migratoria restrictiva y desplazando la idea de un Estado de bienestar inclusivo. Discusión: Jimmie Åkesson, en su libro Det moderna folkhemmet, presenta una versión de “folkhem” donde la lucha de clases es reemplazada por la cohesión social, el bienestar seguro y el "chovinismo de bienestar", transformando así el concepto original. Conclusiones: El concepto de “folkhemmet” ha evolucionado, reflejando cambios ideológicos y políticos, pasando de un modelo inclusivo a uno con una visión más restrictiva de la cohesión social.
Moving a relationship of widespread conflicts and distrust into a virtuous circle of trust and cooperation is challenging, yet the case examined in this article shows that it is possible. A problematic start can indeed lead to a positive outcome. In the early twentieth century, Norway experienced the highest levels of labour conflict in Europe. Class conflicts were intense and often violent, with deep mistrust between the parties in the labour market. This situation changed markedly when the Norwegian Employers’ Confederation and the Norwegian Confederation of Trade Unions signed the Basic Agreement in 1935. This agreement not only led to a lasting decline in labour conflicts, but it also marked a crucial early step towards a system of close collaboration between labour and capital in Norway. By focusing on the intimate relationship between beliefs, trust, and cooperation, this article explores how the labour market parties transitioned from widespread conflict and open struggle to a system of peaceful negotiations and compromises. Changes in beliefs enabled the parties to coordinate on a new cooperative equilibrium, an equilibrium that continues to characterise Norway’s labour market today.
Immigrants and their native-born children often face considerable wage penalties relative to natives, but less is known about whether this inequality arises through differences in educational qualifications, segregation across occupations and establishments, or unequal pay for the same work. Using linked employer–employee data from Norway, the authors ask whether immigrant–native wage disparities 1) reflect differences in detailed educational qualifications, labor market segregation, or within-job pay differences; 2) differ by immigrant generation; and 3) vary across different segments of the labor market. They find that immigrant–native wage disparities primarily reflect sorting into lower-paying jobs, and that wage disadvantages are considerably reduced across immigrant generations. When doing the same work for the same employer, immigrant-background workers, especially children of immigrants, earn similar wages to natives. Sorting into jobs seems more meritocratic for university graduates, for professionals, and in the public sector, but within-job pay differences are strikingly similar across market segments.
We maintain that employer associations are a specific form of employer collusion that is overt, formal and labour market‐focused which encompasses but is by no means confined to collective bargaining. We consider the conditions under which this form of collusion might emerge, and how it might develop. Since the context is the decline of employers’ associations in collective bargaining, we look at how collective bargaining involvement (and its disappearance) might relate to the growth or decline of other forms of collusion in areas such as product and financial markets, and political influence. Our central contention is that employers’ associations continue to perform an important role in helping employers set the terms of trade, albeit one that has adapted to the demise of sectoral bargaining.
The Norwegian non-oil economy has benefitted greatly from the presence of the oil sector. Compared to neighboring and otherwise similar Sweden, Norwegian non-oil (“mainland”) firms on average receive significantly higher product prices and pay higher wages. This development can be explained by a model where oil companies drive up the prices of domestic suppliers as they consider foreign suppliers imperfect and inferior substitutes. Although productivity also improved, the resulting increased prosperity is mainly the result of higher prices and wages. Despite a tax system designed to channel the entire resource rent into the sovereign wealth fund, more than half of the resource rent may have leaked to the private, non-oil economy because of the mechanisms studied here. Because the bonanza must end with the oil industry, important productivity gains have not saved Norway from the Dutch disease.
In one of the most influential contributions to modern political economy, Hall and Soskice have launched a distinction between ‘liberal’ and ‘coordinated’ market economies, placing the Nordic countries firmly in the latter category. We argue that, while the H&S distinction may serve classificatory purposes, seeing the Nordic model in terms of ‘coordinated capitalism’ blurs the distinctive features of the Nordic countries’ success as productive and fair economies. We contend that the central formula behind this success lies in what we call the Nordic model’s ambidexterity – the capacity to combine collaborative and competitive elements and skilfully navigate between them. Using an interdisciplinary perspective (inspired by organisation theory, cultural semiotics and evolutionary analysis), we provide a conceptual basis for reinterpreting the Nordic Model as an ambidextrous combination of culturally rooted, collaborative strategies that are subsequently competitively exposed. The article illustrates the workings of this ambidexterity in three societal domains: work life (including female participation), resource management – illustrated by the Norwegian petro-economy – and international business management and regulation with a focus on CSR. In each case we will show how collaboration is intertwined with pragmatic competitive exposure, yielding high productivity, high welfare, as well as fair income and wealth distribution.
This study investigates the extent to which neoliberalism could be the cornerstone for economic reform and diversification in Gulf Cooperation Council (GCC) countries. It seeks to determine the most important effects of neoliberalism as well as its social and economic costs, starting from the premise that economics is by and large a social science. The study is aimed at exploring the possibilities of crafting an economic doctrine suited to the conditions of these countries and capable of satisfying their current and future needs with the aim of fostering sustained development and stability on a sound basis. In its quest for answers, it uses a descriptive, critical and interpretive methodology in an analytical framework that combines the views of prominent economists and social scientists while paying special attention to the scientific and critical views of Arab Gulf thinkers and their analysts. The study looks at what it called “the five major defects” of neoliberalism: an unfair class system; lack of social solidarity; the debt trap; communal protests; and marketization and commoditization. Five warnings were made to the citizens of the Gulf States: to avoid impoverishment; to be wary of debt; to avoid ventures; to be wary of predators; and to be wary of intruders. The study tackled the twin issues of opting for limited liberalism and the need for reform to allow the economy breathing space.
This chapter provides an introduction to civic engagement in Scandinavia. The chapter accounts for the institutional background of the popular mass movements, the welfare state and the negotiated market economies in the Scandinavian countries. We argue that the combination of these institutions feed into a combination of supply and demand mechanisms that are necessary to comprehend in order to understand not only the levels of civic engagement but also the structure and composition of the organized parts of civil society. Further, we discuss the internal variations between the Scandinavian civil societies and the most important challenges for civil society and voluntary associations in this context. Finally, we provide an overview of the logic and structure of this book.
This Introduction sets out different ways of engaging with the history of the Scandinavian countries to create a framework of the themes and positions regarding egalitarianism in Scandinavia that is pursued in the following chapters. After briefly discussing egalitarianism as a theoretical possibility, it is explored in relation to the ideological and social construction of Scandinavian welfare states, investigating in particular the role of civil society and politics. Then is shown how, in historical terms, egalitarian popular movements have become institutionalized and tied to state policy. One characteristic of this region appears to be that egalitarian movements in Scandinavia have largely been picked up, co-opted by, and made part of the state and its institutions. Then a further elaboration on what egalitarianism as a cultural and social value in Scandinavia may mean, and an exploration of its institutionalization in this context are given. In the final section, how the political project of egalitarianism has been pursued in an era of migration is discussed.
The process of creative destruction is being documented for a growing number of countries as the required firm-level data are becoming more easily accessible to researchers. Some early attempts have been made to compare results from the individual country studies and to gain insights into the sources of the variation in firm dynamics across countries. Comparative studies may be particularly useful to test the hypothesis that market structure and institutional differences across countries affect the observed magnitude, nature and efficiency of the creative destruction process. However, these "meta analyses" or ex-post comparisons of country studies are inherently difficult given differences in measurement and methodology across studies. Ideally, firm-level data would be pooled across countries in a harmonized fashion in order to exploit within and between country variations in a fully consistent manner. While there has been some progress in creating comparable firm-level data through surveys sponsored by international organizations, virtually all of the pooled firm-level datasets do not reflect representative samples of firms in each of the countries. The pooling of nationally representative firm-level data used by national statistical agencies is essentially impossible given privacy and confidentiality restrictions on micro data. This paper highlights the measurement and analytical challenges incurred using an alternative approach, namely the compilation of harmonized detailed statistics on firm dynamics obtained by applying common definitions and extraction criteria across countries. Even this ex-ante harmonization of definitions and extraction criteria does not prevent problems of cross-country comparability, since there are idiosyncratic features in the country datasets that cannot be reconciled. A closely related problem with such cross-country comparisons of measures of firm dynamics is that measurement errors vary across countries, especially with respect to the coverage of different types of businesses and the quality of longitudinal linkages. For measures of firm dynamics both are critical and imply that the direct comparison of the magnitude of creative destruction across countries is problematic. In this paper we present comparisons of those measures where the problems are less severe. Further, many cross-country comparisons are made by exploiting the within-country variation, i.e. by performing difference-in-difference comparisons. We illustrate these measurement issues taking advantage of a newly assembled dataset that draws from separate national micro-data sources (business registers, census, or representative enterprise surveys) but with ex-ante harmonization of the metadata and computational methods.
This paper models balanced-budget redistribution between socio-economic groups as the outcome of electoral competition between two political parties. Equilibrium is unique in the present model, and a sufficient condition for existence is given, requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate. The validity of Hotelling's principle of minimum differentiation, and of Director's Law, are examined under alternative hypotheses concerning administrative costs of redistributions, and voter's possibilities both of abstaining from voting and of becoming campaign activists for one of the parties. The policy strategy of expected-plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality. Incomes are fixed and known, so lump-sum taxation is feasible. However, constraints on tax/transfer differentiation between individuals are permitted in the analysis.
Resource misallocation can lower aggregate total factor productivity (TFP). We use microdata on manufacturing establishments
to quantify the potential extent of misallocation in China and India versus the United States. We measure sizable gaps in
marginal products of labor and capital across plants within narrowly defined industries in China and India compared with the
United States. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed
in the United States, we calculate manufacturing TFP gains of 30%–50% in China and 40%–60%.in India.
This paper studies the considerably higher level of wage inequality in the United States than in nine other OECD countries. The authors find that the greater overall U.S. wage dispersion primarily reflects substantially more compression at the bottom of the wage distribution in the other countries. While differences in the distribution of measured characteristics help to explain some aspects of the international differences, higher U.S. prices (i.e., rewards to skills and rents) are an important factor. Labor market institutions, chiefly the relatively decentralized wage-setting mechanisms in the United States, provide the most persuasive explanation for these patterns. Copyright 1996 by University of Chicago Press.
International comparisons of national social policy rely overwhelmingly on programme spending ratios. However, there are widespread problems with this type of data as an indicator of trends in societies' commitments to social protection. This paper suggests an alternative approach to understanding social commitments and introduces a new international data set of social insurance programmes that is comprised of important characteristics of three types of public insurance: unemployment, sick pay, and public pensions. The data are available annually from the 1970s for 18 OECD countries. Looking more closely at trends in two programme characteristics, income replacement rates and programme coverage, we develop an indicator of expected benefits. According to this indicator, there is considerably more evidence of welfare state retrenchment in recent years than most analyses of public spending have suggested. Copyright 2006, Oxford University Press.
Sweden has a remarkable record in reducing inequality and virtually eliminating poverty. This paper shows that: 1) Sweden achieved its egalitarian income distribution and eliminated poverty largely because of its system of earnings and income determination, not because of the homogeneity of the population nor of its educational system. 2) In the job market Sweden is distinguished by a relatively egalitarian distribution of hours of work among those employed, which may be an interrelated part of the Swedish economic system, and until the recent recession, by a high employment rate. 3) Tax and transfer policies contribute substantially to Sweden's overall distribution record. In contrast to many social welfare systems, Sweden's is largely a workfare system, providing benefits for those with some work activity. 4) Part of Sweden's historic success in maintaining jobs for low wage workers while raising their wages resulted from policies that directly or indirectly buttress demand for low skill workers, notably through public sector employment. 5) Sweden's tax and transfer policies have maintained the position of lower income workers and families, including those with children, during its recent economic decline.
The deterioration of the economic performance in Sweden from about 1970 was to some extent the result of a number of exogenous shocks and "unnecessary" policy mistakes. It was, however, also related to basic changes in the economic and social system in Sweden in the late 1960s and early 1970, when government spending, taxes, and regulations started to expand dramatically. It is also argued in the paper that problematic political, economic, and social mechanisms had become embedded in the long-term dynamics of the system itself. These various experiences are the background for recent reforms and retreats of "the Swedish experiment."
This paper provides empirical assessments of the two leading explanations of measured inter-industry wage differentials: (1)
true wage differentials exist across industries, and (2) the measured differentials simply reflect unmeasured differences
in workers' productive abilities. First, we summarize the existing evidence on the unmeasured-ability explanation. Second,
we construct a simple model which shows that if matching is important then endogenous job-change decisions can create important
self-selection biases even in first-differenced estimates of industry wage differentials. Third, we analyze a sample that
approximates the experiment of exogenous job loss. We find that (i) the wage change experienced by a typical industry switcher
closely resembles the difference in the relevant industry differentials estimated in a cross-section, and (ii) pre-displacement
industry affiliation plays an important role in post-displacement wage determination.
Is the political support for welfare policy higher or lower in less egalitarian societies? We answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner. When voters have both redistributive and insurance motives for supporting welfare spending, the effect of inequality depends on how benefits are targeted. Greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings. With endogenous targeting, support for benefits to those without earnings declines as inequality increases, whereas support for aggregate spending is a V-shaped function of inequality. Statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model.
This paper analyzes the role of establishments in the upward trend in dispersion of earnings that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments. The main finding is that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. Our results direct attention to the role of establishment-level pay setting and economic adjustments in earnings inequality.
Applying the new economics of organization and relational theories of the firm to the problem of understanding cross‐national variation in the political economy, this volume elaborates a new understanding of the institutional differences that characterize the ‘varieties of capitalism’ found among the developed economies. Building on a distinction between ‘liberal market economies’ and ‘coordinated market economies’, it explores the impact of these variations on economic performance and many spheres of policy‐making, including macroeconomic policy, social policy, vocational training, legal decision‐making, and international economic negotiations. The volume examines the institutional complementarities across spheres of the political economy, including labour markets, markets for corporate finance, the system of skill formation, and inter‐firm collaboration on research and development that reinforce national equilibria and give rise to comparative institutional advantages, notably in the sphere of innovation where LMEs are better placed to sponsor radical innovation and CMEs to sponsor incremental innovation. By linking managerial strategy to national institutions, the volume builds a firm‐centred comparative political economy that can be used to assess the response of firms and governments to the pressures associated with globalization. Its new perspectives on the welfare state emphasize the role of business interests and of economic systems built on general or specific skills in the development of social policy. It explores the relationship between national legal systems, as well as systems of standards setting, and the political economy. The analysis has many implications for economic policy‐making, at national and international levels, in the global age.
Scholarship on varieties of capitalism (VofC) explores the ways in which the institutions structuring the political economy affect patterns of economic performance or policy making and the distribution of well-being. Contesting the claim that there is one best route to superior economic performance, a number of schemas have been proposed to explain why countries have often been able to secure substantial rates of growth in different ways, often with relatively egalitarian distributions of income. Prominent among them is a VofC analysis focused on the developed democracies that distinguishes liberal and coordinated market economies according to the ways in which firms coordinate their endeavors. On the basis of institutional complementarities among subspheres of the political economy, it suggests that the institutional structure of the political economy confers comparative institutional advantages, notably for radical and incremental innovation, which explains why economies have not converged in the context of globalization. Although this framework is contested, it has inspired new research on many subjects, including the basis for innovation, the determinants of social policy, the grounds for international negotiation, and the character of institutional change. In this issue area, there is promising terrain for further research into the origins of varieties of capitalism, the factors that drive institutional change in the political economy, how institutional arrangements in the subspheres of the political economy interact with one another, the normative underlay for capitalism, and the effects of varieties of capitalism on multiple dimensions of well-being.
The original Center for Business and Policy Studies (SNS) in Sweden and the National Bureau of Economic Research (NBER) in the United States (SNS-NBER) study of the Swedish labor market was written in the midst of the economic crisis of the early 1990s. This chapter is a sequel to that study and focuses on the postcrisis performance of the labor market, emphasizing institutional and other changes that have affected wage determination, inequality, and employment. Since the crisis, wage formation has become more decentralized. Centralized bargaining continues to set minimum wages in different sectors, but firms and unions bargain above the minimum and decide on specifics in local bargaining. Decentralization contributed to rising wage dispersion as wage outcomes were more likely to reflect market valuations for particular skills. Some of the 1990s increase in wage dispersion in Sweden presumably reflected catching up with market forces, but the catch-up does not seem complete, given the changing economic environment. Employment outcomes are worse for low-skilled persons and non-OECD (Organization for Economic Cooperation and Development) immigrants than for other workers. However, in the 1990s, the minimum wage increased in hotels and restaurants, which disproportionately employ the less skilled, presumably contributing to the low share of these sectors in the economy.
We propose a political reinforcement hypothesis, suggesting that rising inequality moves party politics on welfare state issues to the right, strengthening rather than modifying the impact of inequality. We model policy platforms by incorporating ideology and opportunism of party members and interests and sympathies of voters. If welfare spending is a normal good within income classes, a majority of voters moves rightward when inequality increases. As a response, the left, in particular, shift their welfare policy platform toward less generosity. We find support for our arguments using data on the welfare policy platforms of political parties in 22 OECD countries.
Because of their more limited inequality and more comprehensive social welfare systems, many perceive average welfare to be higher in Scandinavian societies than in the United States. Why then does the United States not adopt Scandinavian-style institutions? More generally, in an interdependent world, would we expect all countries to adopt the same institutions? To provide theoretical answers to this question, we develop a simple model of economic growth in a world in which all countries benefit and potentially contribute to advances in the world technology frontier. A greater gap of incomes between successful and unsuccessful entrepreneurs (thus greater inequality) increases entrepreneurial effort and hence a country’s contribution to the world technology frontier. We show that, under plausible assumptions, the world equilibrium is asymmetric: some countries will opt for a type of “cutthroat” capitalism that generates greater inequality and more innovation and will become the technology leaders, while others will free-ride on the cutthroat incentives of the leaders and choose a more cuddly form of capitalism. Paradoxically, those with cuddly reward structures, though poorer, may have higher welfare than cutthroat capitalists; but in the world equilibrium, it is not a best response for the cutthroat capitalists to switch to a more cuddly form of capitalism. We also show that domestic constraints from social democratic parties or unions may be beneficial for a country because they prevent cutthroat capitalism domestically, instead inducing other countries to play this role.
The distribution of pay differs significantly across countries and over time among advanced industrial societies. In this paper, institutional and political determinants of pay inequality an studied in sixteen countries from 1980 to 1992. The most important factor in explaining pay dispersion is the level of wage-setting, i.e., whether wages are set at the level of the individual, the plant, the industry, or the entire private sector. The impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private-sector wage-setting. The concentration of unions and the share of the labor force covered by collective bargaining agreements also matter. After controlling for wage-setting institutions, other variables such as the governing coalition, the size of government, international openness, and the supply of highly educated workers have little impact. Economic, political, and norm-based explanations for the association of centralization with egalitarian outcomes are discussed.
We estimate the effects of conditioning benefits on program participation among older long-term unemployed workers. We exploit a Swedish reform which reduced UI duration from 90 to 60 weeks for a group of older unemployed workers in a setting where workers who ex-hausted their benefits received unchanged transfers if they agreed to participate in a work practice program. Our results show that job finding increased as a result of the shorter duration of passive benefits. The time profile of the job-finding effects suggests that the effects are due to deterrence effects during the program-entry phase. We find no evidence of wage reductions, suggesting that the increased job-finding rate was driven by increased search intensity rather than lower reservation wages.
Theory predicts that performance pay boosts wage dispersion. Workers retain a share of individual productivity shocks and high‐efficiency workers receive compensation for greater effort. Collective bargaining can mitigate the effect of performance pay on wage inequality by easing monitoring of common effort standards and group‐based pay schemes. Analyses of longitudinal employer–employee data show that the introduction of performance‐related pay raises wage inequality in non‐union firms, but not in firms with high union density. Although performance‐related pay appears to be on the rise, the overall impact on wage dispersion is likely to be small, particularly in European countries with influential unions.
Is the political support for welfare policy higher or lower in less egalitarian societies? We answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner. When voters have both redistributive and insurance motives for supporting welfare spending, the effect of inequality depends on how benefits are targeted. Greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings. With endogenous targeting, support for benefits to those without earnings declines as inequality increases, whereas support for aggregate spending is a V-shaped function of inequality. Statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model.
This article presents a meta-analysis of recent microeconometric evaluations of active labour market policies. We categorise 199 programme impacts from 97 studies conducted between 1995 and 2007. Job search assistance programmes yield relatively favourable programme impacts, whereas public sector employment programmes are less effective. Training programmes are associated with positive medium-term impacts, although in the short term they often appear ineffective. We also find that the outcome variable used to measure programme impact matters, but neither the publication status of a study nor the use of a randomised design is related to the sign or significance of the programme estimate.
As events highlight deep divisions in attitudes between America and Europe, this is a very timely study of different approaches to the problems of domestic inequality and poverty. Based on careful and systematic analysis of national data, the authors describe just how much the two continents differ in their level of State engagement in the redistribution of income. Discussing various possible economic explanations for the difference, they cover different levels of pre-tax income, openness, and social mobility; they survey politico-historical differences such as the varying physical size of nations, their electoral and legal systems, and the character of their political parties, as well as their experiences of war; and they examine sociological explanations, which include different attitudes to the poor and notions of social responsibility. Most importantly, they address attitudes to race, calculating that attitudes to race explain half the observed difference in levels of public redistribution of income. This important and provocative analysis will captivate academic and serious lay readers in economics and welfare systems.
We present a theoretical analysis of different types of active labor market policies in the context of a search-matching model.
We find that labor market training is effective in bringing down unemployment while public employment services and subsidized
jobs are not effective at all. This theoretical finding is confirmed in an explorative empirical analysis using data from
20 OECD countries.
Proposes a theory that explains why smaller firms have higher and more variable growth rates than larger firms. Relying on employer heterogeneity and market selection to generate patterns of employer growth and failure, the model states that efficient firms grow and survive while inefficient firms decline and fail, regardless of firm size. However, firms that fail are actually firms that, if given more time to succeed, would have grown more slowly. These slow growing firms are most often smaller firms. Also provided is a behavior characterization of entry and prices in equilibrium, which is defined as a pair of functions that characterize optimal output and exit behavior of firms. (SFL)
This paper demonstrates that there is a robust empirical association between the extent to which an economy is exposed to trade and the size of its government sector. This association holds for a large cross-section of countries, in low- as well as high-income samples, and is robust to the inclusion of a wide range of controls. The explanation appears to be that government consumption plays a risk-reducing role in economies exposed to a significant amount of external risk. When openness is interacted with explicit measures of external risk, such as terms-of-trade uncertainty and product concentration of exports, it is the interaction terms that enter significantly, and the openness term loses its significance (or turns negative). The paper also demonstrates that government consumption is the majority of countries.
The authors investigate the effects of wage compression through centralized collective bargaining when growth depends on the continual reallocation of labor from older, less productive plants to new, more productive plants. They first study the compression of wage differentials that derive from decentralized bargaining in heterogeneous plants. The authors then consider wage compression when wage differentials arise from competition among employers over workers of differing quality. They show that wage compression through centralized bargaining can result in higher profits and greater entry of new plants than either decentralized bargaining or a competitive labor market. Copyright 1997 by University of Chicago Press.
Observed human capital explains less than half of wage variation. In BLS Industry Wage Surveys, establishment-based wage differentials
(controlling for occupation) account for 20–70 percent of intra-industry wage variation. This corresponds to a standard deviation
in wages of 14 percent of the mean, almost as large as interindustry wage variation. Investigation suggests that establishment
wage differentials are not random variations or returns to usual measures of human capital.
Germany's more compressed wage structure is widely viewed as the main cause of the German-US difference in employment and unemployment, but part of the compression is due to Germany having a narrower distribution of skills than the US. Even adjusted for skills, however, we find that Germany has a more compressed wage distribution than the US. But relatively little of the US-German employment difference can be attributed to the compressed wage distribution. We find that jobless Germans have nearly the same skills as employed Germans and look more like average Americans than like low skilled Americans, which runs counter to the wage compression hypothesis. Given these patterns, the pay and employment experience of low skilled Americans is a poor counterfactual for assessing how reductions in pay might affect jobless Germans. Copyright 2001 by Oxford University Press.
We construct a locational model of majority voting when competing parties offer special favours to interest groups. Each group's membership is heterogeneous in its affinities for the two parties. Individuals face a trade-off between party affinity and their own transfer receipts.The model is sufficiently general to yield two often-discussed but competing theories as special cases. If the parties are equally effective in delivering transfers to any group, the outcome of the process conforms to the `swing voter' theory: both parties woo the politically-central groups most responsive to economic favours. If groups have party affiliations and each party is more effective in delivering favours to its own support group, we can get the `machine politics' outcome, where each party dispenses favour to its core support group. But in some circumstances the machine may find it advantageous to tax its core and use the proceeds to win the support of other voters.
Published in: Scandinavian Journal 95/4, 1993, pp. 559-579
A dynamic stochastic model for a competitive industry is developed in which entry, exit, and the growth of firms' output and employment is determined. The paper extends long-run industry equilibrium theory to account for entry, exit, and heterogeneity in the size and growth rate of firms. Conditions under which there is entry and exit in the long run are developed. Cross sectional implications and distributions of profits and value of firms are derived. Comparative statics on the equilibrium size distribution and turnover rates are analyzed. Copyright 1992 by The Econometric Society.
A model of endogenous growth is developed in which growth is driven by vertical innovations that involve creative destruction. Equilibrium is determined by a forward-looking difference equation, according to which the amount of research in any period depends negatively upon the amount expected next period. The paper analyzes positive and normative properties of stationary equilibria, and shows conditions for the existence of cyclical equilibria and no-growth traps. The growth rate may be more or less than optimal because a business-stealing effect counteracts the usual spillover and appropriability effects. In addition, innovations tend to be too small. Copyright 1992 by The Econometric Society.
This paper presents an analysis of a 2-person noncooperative bargaining game in which one party is free, subject to certain frictions, to switch between rival partners. This permits us to capture the notion of an asymmetry between "insiders" and "outsiders" in the context of a firm bargaining with its workers, in the presence of unemployment.
This paper considers local wage bargaining as a sequential game and focus es on how different rules of the game affect employment and equilibri um payment to workers and employers. Work-to-rule and other go-slow t hreats lead to low employment, while strike threats lead to high empl oyment. An increase in the bargaining power of the union induces high er or unchanged equilibrium employment in the strike-threat case, whi le employment is reduced in the slow-down case. Finally, if all kinds of industrial actions are legal, only one is credible. Which type de pends on the parameters of the model. Copyright 1988 by Royal Economic Society.
This paper uses cross-sectional and longitudinal data to examine differences in pay for equally-skilled workers in different ind ustries. The major finding is that there is substantial dispersion in wages across industries, even after allowing for measured and unmeas ured labor quality, working conditions, fringe benefits, transitory d emand shocks, the threat of union-ization, union bargaining power, fi rm size, and other factors. In addition, evidence is presented demons trating that turnover has a negative relationship with industry wage differentials. These findings suggest that workers in high-wage indus tries receive noncompetitive rents. Copyright 1988 by The Econometric Society.
This paper explores the hypothesis that wage differentials between skill groups across countries are consistent with a demand and supply framework. Using micro data from 15 countries we find that about one third of the variation in relative wages between skill groups across countries is explained by differences in net supply of skill groups. The demand and supply framework does an even better job at explaining relative wages of low skilled workers. Copyright 2004 Royal Economic Society.
Are competitive wage premia an obstacle to growth? The answer of the architects of the Scandinavian 'model' in the 1950s and 1960s was in the affirmative. By punishing expansive and growth enhancing sectors of the economy, competitive wage premia imposed an unwarranted drag on the rate of structural change. The authors formalize this intuition using a two-sector endogenous growth model, considering both open and closed economy cases. They also show that egalitarian pay compression, combined with active labor market policies, works in the same way as an industrial policy of subsidizing sunrise industries. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
We evaluate the impact of labour market programmes on unemployment durations in Norway, by means of a distribution-free mixed proportional competing risks hazard rate model. We find that programme participation, once completed, improves employment prospects, but that there is often an opportunity cost in the form of a lock-in effect during participation. The average net effect of programme participation on the length of the job search period is found to be around zero. For participants with poor employment prospects, the favourable post-programme effects outweigh the negative lock-in effects. Copyright 2006 Blackwell Publishing Ltd.
University of Linz, Austria and Institute for Social Research, Oslo, Norway, respectively. The paper was written during our stay at the University of California at Berkeley. We are indebted to the Institute of Industrial Relations, UC Berkeley, for its hospitality, and acknowledge financial support by the Austrian ‘Fonds zur Forderung der wissenschaftlichen Forschung’ under the project JO548-SOZ (ZWEIMÜLLER) as well as by the Norwegian NORAS under the LOS-program (BARTH). We are grateful to BILL DICKENS for access to the US-CPS 1983, to MAHMOOD ARAI for cooperation concerning Swedish data as well as to LUTZ BELLMANN and MASAO NAKAMURA who provided regression results for Germany and Canada, respectively. Thanks to ROBERT ROWTHORNE for comments on an earlier draft.
One of the perennial problems of business cyde theory has been the search for a convincing empirical description and theoretical explanation of the behaviour of wage rates during fluctuations in output and employment. Even the empirical question is hardly settled, although the most recent careful study (Geary and Kennan) confirms the prevailing view that real-wage movements are more or less independent of the business cycle. There are really two subquestions here. The first presumes that nominal wage stickiness is the main route by which nominal disturbances have real macroeconomic effects, and asks why nominal wages should be sticky. The second focuses on real wages, and asks why fluctuations in the demand for labour should so often lead to large changes in employment and small, unsystematic, changes in the real wage.
Social insurance vs. redistribution
- E Barth
- H Finseraas
- K Moene
- K M Nilsen
The problem of stability: an analysis of some policy proposals
- Rehn
Trade and wage equality. Mimeo
- F Willumsen