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OECD Jobs Study, Evidence and Explanations, Part II: The Adjustment Potential of the Labor Market

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Incl. bibl. Parts/Parties 1 & 2, glossary/glossaire. We also have/Nous avons aussi: Part 1/Partie 1

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... Moreover, with the progression from simple correlations through regressions using cross-country data to regressions employing pooled cross-country data (and a sprinkling of fixed effects specifications), the results in favor of the coordination thesis weaken and the harder it is to detect a relationship between bargaining coordination and economic performance. Another commonality noted by Aidt and Tzannatos is that coordination benefits, where observed, are more likely in the 1970s and the 1980s than in the 1990s (see also OECD 1997). ...
... The case against extension arrangements was made forcefully in the OECD Jobs Study (OECD 1994) where it was proposed that administrative extension of agreements that impose inflexible conditions should be phased out. Its main objections were twofold. ...
... 8 The sources of oversimplification are twofold. First, we have neglected research investigating potential interactions between labor market policies and the institutional features of the collective bargaining system (on the effects of which, see inter al. OECD 2004;Elmeskov et al. 1998;Belot and van Ours 2004). Second, we have ignored work on interactions between collective bargaining and monetary and fiscal policy, such as that between coordinated wage bargaining and central bank independence (for a compact survey of which, see Aidt and Tzannatos 2008, pp. ...
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This paper addresses the design of the machinery of collective bargaining from the perspective of microeconomic and macroeconomic flexibility. In the former context, somewhat greater attention is given over to enterprise flexibility than external adjustment. In the latter context, close attention is also paid to changes in collective bargaining along the dimensions of bargaining coverage, structure, and coordination. Support is adduced for the German, contemporary Scandinavian, and British models. The role of trust in securing micro and macro flexibility also receives attention, suggesting that the polder or Dutch model might also be expected to populate the firmament of fit-for-purpose collective bargaining arrangements. JEL Classification: Microeconomics/Institutions (D02), Institutions and the Macroeconomy (E02), Employment/Unemployment/Wages (E24), Income Distribution (E25), Macroeconomic Policy Objectives (E61), Labor Economics Policies (JO8) Trades Unions (J51), Collective Bargaining (J52), Labor-Management Relations (J53), Public Policy (J58), Comparative Analysis of Economic Systems (P51)
... This article outlines how the OECD's Directorate for Education, Employment, Labour and Social Affairs (DEELSA) influenced EU welfare and labour market reform agendas between 1994 and 2001. 1 Following an upturn in unemployment levels at the beginning of the 1990s, OECD Labour Ministers and Economic and Finance Ministers asked the OECD in 1992 to study the underlying reasons for high unemployment levels in member countries. In 1994, the OECD reported back and presented its Jobs Study (OECD 1994a(OECD , 1994b(OECD , 1994c. The study argued that labour market regulations and welfare state provisions should be scaled down in order to make labour markets more flexible and reduce structural unemployment. ...
... The study is organized around a list of ten demands in favour of liberal welfare and labour market reform and is put forward in a short pamphlet (1994a). Two volumes of supporting 'evidence and explanations' provide the authority of the discipline of academic economics without being much referred to in the more influential pamphlet (OECD 1994b(OECD , 1994c. Some of the demands are fairly general in scope and include the commitment to macroeconomic stability, the fostering of an entrepreneurial climate, diffusion of technology, and improvement in education and training. ...
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This article explains how the Organization for Economic Co- operation and Development (OECD) assumed a leadership role in creating and disseminating liberal welfare reform and labour market policy proposals between 1994 and 2001. The article first sketches the increased Europeanization of welfare and labour market policies throughout the 1990s. The second part examines how international organizations such as the OECD influence agenda-setting at different levels of policy-making by providing a controlled environment for the creation, development and dissemination of political discourse. The OECD’s influence on policy-making can be explained through an analysis of the specific features of its ‘organizational discourse’, dominated by liberal economists, and characterized by the exclusion of interest groups. The third part takes the OECD Jobs Study (1994)as an exemplary case of its organizational discourse and demonstrates how the OECD utilized this study to bridge the gap between abstract liberal economic beliefs and concrete agenda-setting efforts. It underlines the high degree of influence of the Jobs Study on the EU’s subsequent European Employment Strategy (EES). The conclusion poses the question: to what extent could the OECD’s ‘campaigning on expertise’ potentially weaken its long-term institutional interests if the EU chooses to ‘take over’ OECD discourses wholesale – thereby leaving less organizational space for the OECD in the future?
... Unemployment in Brazil has always existed next to informal employment, although numbers up to the mid-nineties have been rather low compared to OECD-averages in the same period. However, during the second half of the last decade, unemployment rates have increased and now exceed the standardized OECD values around 7% for 1999 (OECD 1999). As remarked in the new IDB-Labor Market Study on Latin America {IDB 2003), high levels of unemployment indicate a problem in the labor market, but low levels of unemployment not necessarily signal a well-working labor market. ...
... Compare for example(OECD 1994) .Silke Woltermann -9783631753705 Downloaded from PubFactory at 10/04/2018 02:55:33PM via free access ...
... Bargaining coordination has been widely used and preferred over centralisation as an indicator to assess and explain wage developments (Soskice 1990;Nickell 1997;OECD 1997OECD , 2004. It is defined as the integration or synchronization of pay policies of distinct bargaining units (Soskice 1990;Traxler and Brandl 2012) or "the degree to which minor players deliberately follow along with what major players decide" (Kenworthy 2001:75). ...
... Its approach had been preceded in the USA and found followers in New Zealand and Australia, but none in Europe. In the 1990s as part of its 'Jobs Strategy' , the OECD advised its members to "refocus collective bargaining at sectoral level to framework agreements, in order to give firms more leeway to adjust wages to local conditions; introduce opening clauses for local bargaining parties to renegotiate sector agreements; (and) phase out administrative extension" (OECD 1994). These are the policies advocated, with more coercion, by the international institutions (IMF, EU, ECB) as part of their financial assistance programs during the current recession and souvereign debt crisis. ...
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Collective bargaining over labour conditions between unions and employers is a key labour market institution in democratic societies, guaranteed by international and national law. Its coverage, organization and impact have varied over time and across countries. Inclusive bargaining, conducted by employers' associations with a mandate to bargain, and supported by the state, received a strong impulse during the interwar Depression. In the Great Recession a more exclusive version based on enterprise bargaining appears to have been favoured by governments and international agencies. How this relates to changes in bargaining coverage, multi-employer and multi-level bargaining, rules on extension and opening clauses is the subject of this paper, which surveys developments in 38 OECD and EU countries. A distinction is made between long-term and crisis-related changes, and between regulatory and non-regulatory changes during the Great Recession.
... Few international rules of thumb can be glean from the aggregate data and the econometric evidence is mixed (Calmfors 1993). Low unemployment in Sweden has frequently been attributed to the Swedish interventionist labour market policies, however at the same time, low Japanese unemployment has always been associated with very low expenditure on labour market programs (OECD 1994). 11 Moreover, because government policy stance is often endogenous, that is, governments directly vary labour market program expenditures with the unemployment rate, care must be taken to disentangle cause and effect in statistical work. ...
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... However, there are several reasons to justify a differential impact of the fiscal wedge components. Focusing on social contributions, even though they are usually a payroll tax, their tax base and tariff usually differ from those of personal income taxes (not to mention the linkage effect), and consumption taxes (see OECD 1990OECD , 2007. Additionally, the salary wedge includes the price wedge, that is, the gap between producer and consumer prices. ...
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In this paper we apply the meta-regression technique to survey the empirical literature on the economic incidence of labour taxes and social security contributions. In particular, we focus on the effects of taxation on wages to test the conventional view that employees bear the burden due to lower net wages. Based on 52 empirical papers, we find that economic institutions, the tax wedge definition, and the temporal focus significantly affect the results. In the long run, workers bear between two thirds of the tax burden in Continental and Anglo-Saxon economies, and nearly 90 % in the Nordic economies. However, despite the numerous set of controlling variables, a significant part of the variability of the empirical literature remains unexplained.
... In Europe institutions introduce inefficiency: large welfare states and strong unions stifle labor demand and reduce work incentives (Olson 1982;Lindbeck 1985;Giersch 1993;OECD 1994a). In short, the unregulated labor market of the United States produced low rates of jobless, while the expansive welfare states and labor unions of Western Europe created large-scale idelness and sluggish economic performance. ...
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... A somewhat stronger impact of benefits emerges from an OECD study which reports an elasticity of total unemployment rate above unity and an elasticity of the ratio between male and female unemployment rates equal to 0.53 (OECD, 1994). However, unlike the findings of the studies reported above, these estimates are based on macroeconomic data and, as the OECD study rightly points out, "in these correlations using aggregate data, coefficients could be biased by the omission of other variables, reverse causality, and errors in the data" (OECD, 1994, p. 179). ...
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This chapter analyses in which ways diffusion based on interdependent policy learning explains expenditure on active labour market policies (ALMP) in the OECD countries. By applying error correction models using multiplicative spatial Prais-Winsten regressions for analyzing the diffusion of ALMPs in 22 OECD countries from 1991–2013, we find evidence of governments adapting labour market policy strategies that have proven successful, that is, perform well in increasing labour market participation in other countries. However, interdependent learning is conditional on the institutional framework: policy-makers rather learn from the experience of other countries in the same welfare regime. Even more importantly, the results point to the importance of the European Employment Strategy (EES) as an international coordination framework facilitating policy learning.
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The objective of this paper is to identify and discuss the advantages and limitations of measuring the employment protection legislation (EPL) by means of the OECD EPL Indices, using the Polish labour market as an example. It is argued that the OECD EPL Indices play an important role in measuring the strictness of the employment protection legislation. Specifically, calculating the EPL Indices enables applying quantitative methods to assess the impact of the strictness of the labour market regulations on the unemployment level and its dynamics. It also makes it possible to compare the EPL level among the OECD countries, and to track or evaluate labour market reforms. Even if as a result of modifications, the OECD Indices have become a more accurate measure of EPL, this measure should be interpreted with caution. In this context, the case of Poland reveals that regulation for employees on open-ended contracts is very lax, though the uncertainty in terms of trial length and courts decisions remains an issue. Legislation of fixed-term contracts is rather lax, however utterly flexible civil contracts and ‘bogus’ self-employment are being abused. From a different angle, regulations for collective dismissals and on Temporary Work Agencies seem to be moderately restrictive.
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Markets are the mechanisms through which economic resources are channelled and where economic incentives are set. Hence, their functioning is critical to both static and dynamic efficiency as well as to the responsiveness of the economy to shocks. While both product and factor markets are important in allocating resources, factor markets also influence the rate of resource-creation.2 This chapter affirms that markets are crucial to growth and combines suggestions of Topel (1999) and Pritchett (2000) to argue that country-specific markets should be a principal focus of future research on growth.
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In this chapter the unemployment patterns in Sweden over the last 25 years will be examined. The aim is not to give a full explanation as to why these patterns have developed the way they have. Such a task would require a much more detailed and thorough analysis of the country's economic history and economic policies, of international business cycles, of the development and globalization of world markets, etc, than can be provided here. This chapter has a much more limited ambition – the Swedish unemployment patterns will be examined in relation to certain welfare state arrangements to see what can be said and what cannot be said about the role of the latter. The underlying issue is whether high unemployment levels can be explained by labour market 'rigidities' or 'sclerosis' due to welfare state policies (cf, eg, Esping-Andersen 1999: ch 7; Lindbeck 1994; Nickell 1997; Nickell and Layard 1999; Siebert 1997). Not every kind of welfare state intervention in the labour market can be considered. Three types of measures will be treated, all of which, though, are directly related to the problem of unemployment. The first type is employment protection legislation, behind which there is an ambition to protect workers from being too easily dismissed from jobs and perhaps thrown into unemployment. Strict regulation may, however, also have other consequences and is therefore much debated. There are quite a few studies on this topic (see, eg, Buechtemann 1993; Gregg and Manning 1997; Grubbs and Wells 1993; Nickell 1997; Nickell and Layard 1999; OECD 1999: ch 2; Scarpetta 1996). It is sometimes argued that severe rules make employers hesitant to recruit workers since they consider it too costly to get rid of them again in case they are not well suited for the job tasks or if the company needs to downsize. A second type of welfare state intervention is to provide unemployment benefits for those who cannot find a job to earn their living. Also in this case we find several studies concerning the possible effects (see, eg, Atkinson and Micklewright 1991; Atkinson and Mogensen 1993; Calmfors 1994; Layard, Nickell, and Jackman 1991; Martin 2000; Nickell 1997; Nickell and Layard 1999; Reissert and Schmid 1994; Sjöberg 2000). A crucial aspect is the generosity of the benefit systems in terms of replacement rates and duration of payments. For one thing the reservation wage, ie the lowest wage at which individuals accept a job, may be affected. If the unemployed are well provided for they may have little incentive to find employment quickly. It is often concluded that generous benefits lead to a prolongation of unemployment spells.
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At present, the Dutch labour market receives acclaim for its strong job growth and decreasing unemployment rate. From a Dutch perspective, the high skill level and internal flexibility of German workers stand out. How can these and other differences in current performance be linked to labour market institutions? And, do economic trends require more flexible and diverse labour relationships, or is there a future for long-term commitment and cooperative exchange?
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This chapter deals with cooperative exchange on the German and Dutch labour market. The structure is as follows. First, Section 9.1 addresses the collective bargaining systems in both countries. Next, Section 9.2 compares the German apprenticeship system to the Dutch system of vocational education at upper secondary level. Subsequently, Section 9.3 turns to the co-determination arrangements in both countries. Finally, Section 9.4 presents the main policy options from the labour market analysis in Chapter 8 and 9.
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In verschiedenen Veröffentlichungen wird statt von Globalisierung von einer “Internationalisierung der Kapitalstrukturen” (Schmidt 1996, S. 2) gesprochen. Verengt man den lexikalischen Begriff Globalisierung, der einfach die Tatsache beschreibt, dass Unternehmen weltweit agieren, noch weiter, so lässt sich von “weltweitem oder globalem Wettbewerb” zwischen Unternehmen sprechen (Cichon 1988, S. 36). Diese Definition mag einigen zu eng erscheinen, da sie anscheinend nur dem Preiswettbewerb Rechnung trägt. Berücksichtigt man allerdings, dass Preise u. a. kostendeterminiert sind, dann wird in die Begriffssetzung “Globalisierung”, verstanden als “weltweiter Wettbewerb”, auch die Produktionsseite einbezogen (Genosko 1997, S. 284).
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This chapter discusses the evolution of the idea of a flexible labour market as a smooth shock absorber in case of asymmetric shocks. The concept of flexible labour markets became an institutionally well-established concept when the OECD constructed its index of labour market strictness. The OECD recognised, however, the weakness of its narrow approach and the European Commission put forward the more novel notion of flexicurity. Next, this chapter explains how the proposal of the concept of flexicurity aims at reaching a reasonable agreement between both the efficiency and the security principles by taking into consideration the interest of all the stakeholders in the labour market, including those who are inactive or unemployed. Further, we provide a wide overview of the various approaches concerning the issue of flexible labour markets. We also develop a thorough analysis of the implementation of the notion of flexicurity in several EU Member States such as Denmark, The Netherlands, Austria and Spain. In the case of Spain, we highlight the few elements of flexicurity contained in the Spanish labour market reforms during the 1980s and 1990s, as well as in the most recent reforms during the 2010–12 period.
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Globalization, that catch word of our time, is provoking mixed reactions in the industrialized world. Most see it as inevitable. Many defend it as a positive phenomenon. Many others — workers in particular — are uneasy about the effects it is having on them and feel defenceless, unable to protect themselves against what they consider to be its negative consequences.
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Germany, relying on a pay-as-you-go pension system has increased regular retirement age to 67 due to its ageing population caused by decreasing birth rates and increasing life expectancy. Using data from the nationally representative ‘Survey on continuing in employment in pensionable age’, we investigate the relevance of training motivation for work ability and the desire to work past retirement age and whether differences between social groups reflect inequalities in training participation. Results show significant positive correlations between continuing training motivation and work ability and desire to work past retirement age. Differentiated for selected respondent groups the level of qualification has a significant influence. This effect was stronger than any differences with regard to gender or employment participation. Results imply external conditions only partly explain older workers’ work ability or desire to work past retirement age. Compared to inequalities in training participation, motivation for continuing training is high across analysed subgroups.
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The rise of youth unemployment has been one of the most serious problems which policymakers have had to deal with over the last two decades. Neoclassical economic theory suggests that the deregulation (i.e. higher flexibility) of the labour market stimulates firms to hire young people and—therefore—reduces youth unemployment. The aim of this study is to empirically test the validity of this hypothesis, analysing data on youth unemployment and labour market regulation index (LMRI) for 28 European countries in the period between 2000 and 2018. The empirical results—using two different econometric techniques (time and fixed effects that allows to take into account the presence of heterogeneity of countries in the model and pooling mean group (PMG) estimator providing results about the short and long run relationship between LMRI and youth unemployment)—do not provide evidence in support of the neoclassical hypothesis. In particular, the effect of higher flexibility of the labour market is negative and statistically significant (at 1%) only when a dummy variable for the Eastern country group is included in the model. Vice-versa, the paper shows that higher economic growth and higher investment in active labour market policy represent the key variables to reduce the youth unemployment. In conclusion, the paper raises many doubts that the introduction of flexibility measures in itself can represent a useful tool to counteract the increase of youth unemployment in Europe.
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This article reassesses the link between the structural and cultural aspects of social security. Do Esping-Andersen’s ‘Three Worlds’ exist empirically if one considers a comprehensive set of formal institutions simultaneously? And if so, do such regimes coincide with coherent differences in people’s value orientations in this field, or informal cultures? In order to answer these questions, nonlinear principal components analysis was applied to a group of countries at the core of the original Esping-Andersen typology. Nonlinear PCA seems to be a promising tool for comparative research because the technique is able to handle discrete data and nonlinear relationships, and the number of variables can exceed the number of countries. The outcomes of the analyses suggest that the ‘Three Worlds’ of formal social security had a firm empirical basis in the 1990s, and that the typology remains largely valid today, albeit with some qualifications. Furthermore, three different informal ‘cultures of social security’ emerged, with country clusters quite similar to those of the structural regime typology.
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