Labor market policies 1 of 20 4 Labor market policies: historical and comparative perspectives Philippe Askenazy (Paris School of Economics) www.jourdan.ens.fr/~askenazy/ laborpolicy.htm
Jan 06, 2016
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4Labor market policies:historical and comparative
perspectives
Philippe Askenazy (Paris School of Economics)
www.jourdan.ens.fr/~askenazy/laborpolicy.htm
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2000: Unemployment rate %. OECD
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Altered paradigms
European commission: the Lisbon agenda =Flexsecurity + knowledge economy
ILO: decent work
OECD job study revision: mix of low labor market rigidities and low product market rigidities (very fragile evidence)
US debate (still alive!) on the minimum wage: Reich versus Neumark
Nordic countries: high wages/low inequality… and low unemployment/ high participation rates
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Flexsecurity
FlexibilityExternal numerical flexibility: lay-offs, fixed term
contracts, temporary agency work.Internal flexibility: working time flexibility, overtime.Functional flexibility: flexibility within firm through multi-
tasking, job rotation. Wage flexibility, according to performance.
SecurityJob security: dismissal protection, etc.Employment security: employability (education, training). Income security: unemployment benefits, social security. Combination security: work-life balance.
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Flexsecurity
Consistent with high job/creation in the knowledge economy
High security feeling
But costly
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Job insecurity and spending on labor market policies. OECD countries, 2000
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Knowledge economy. R&D intensive countries in 1993
2
2,2
2,4
2,6
2,8
3
3,2
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Knowledge economy. R&D intensive countries in 2002
2
2,5
3
3,5
4
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Anglo-Saxon countries
An increase of inequality and a decline of the labor share…
Even dramatic
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Anglo-Saxon countries
UK: massive job creations in the public sector
5000
5200
5400
5600
5800
6000
6200
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Anglo-Saxon countries
The (re-)introduction of the minimum wage - 1999: UK- 2000: Ireland
Or significant increases at the end of the 1990’s: Australia New-Zealand
Evaluations for the UK (see Low-pay Commission): no significant impact on employment, lower profit margin in low-skilled intensive services (cleaning…)
While Uk or Irish minimum were immediately high
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Anglo-Saxon countries
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Anglo-Saxon countries
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A convergence of models or the application of the flexsecurity model? Ex: Germany
Hartz Reforms 2003 -2005: Getting the unemployed into jobs through
Self employment grant.Personnel Service Agencies (PSA) providing
temporary employment to unemployed.Mini and Midi jobs, facilitating low-wage, short hours
employment .New benefit (ALG II) for long-term unemployed with
strict take-up rules (any job is suitable), tight eligibility criteria, low benefits.
Limited training, decline number training places.
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A convergence of models. Ex: Germany
More marginal, insecure and flexible employment. Low wage work rise (about 20% of the workforce up
from 12%)… especially for female Global decline of real wages Decline of the labor share
But high export competitivity
Very little evidence in favor of a positive impact on employment (See various IZA working papers)
Because of a deprived internal market?
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France 2002-2007: End of the reduction of working time process
Chirac: Raffarin (Fillon), de Villepin
Even reverse it? European Labour Force Survey:
-3,5
-3
-2,5
-2
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
LV SK IE UK HU BE RO SI PT EE FI PL BG LT NL SE GR AT DK MT DE CZ EU25
ES CY LU IT FR
Change 1998-2002 Change 2002-2005
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France 2002-2007 Extension of the social contribution cuts
~ 8 billions euros no significant impact on employment! (unpublished papers L’Horty et al. (2010), Kramarz et al. (2009, unpublished)
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France 2002-2007
Again, “Enrich the labor content of growth” through niche job markets
“Chèque emploi service universel” (Borloo) Probably a positive impact but no detailed evaluation
Complete social and fiscal exonerations in 100 special zones (Zones Franches Urbaines) [2000 ; 10,000] job created. But unit cost in evaluated zones: about 70 Keuros!
CDD senior (short-term contracts for workers > 55) 0 impact
Villepin: “Contrat Nouvelle Embauche” Illegal! Thus removed in 2007…
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France 2007-2011
“Working more for earning more”
2007: Very positive expectations
Rapid decrease of unemployment Creation of “Pôle emploi” for improving the matching process and sanctions
The policy can favor overtime hours… Labor offer: Revenu de Solidarité Active And new entrepreneurs “Auto-entrepreneurs”
Inconsistent with the crises?
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Conclusion: the limits of modern labor policies
Theories born 25 years agoMain principles fixed 20 years ago…
Some (in)efficiency but unable to solve mass unemployment… or its return
However, significant impacts on working poor, inequality or job (in)security, public deficits
=> Variety of “models”: see 4 next courses
Since 2008, the specter of jobless growth
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Harmonized unemployment rate, Nov., 2010
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Harmonized youth unemployment rate, Nov., 2010