The Political Economy of Labour Market Policies in Western and Eastern European Countries

Neujobs Working Paper No. D6.3/August 2012

45 Pages Posted: 3 Oct 2012

See all articles by Olaf van Vliet

Olaf van Vliet

Leiden University - Leiden Law School; Leiden University - Department of Economics

Koen Caminada

Leiden Law School - Department of Economics

Kees Goudswaard

Leiden Law School - Department of Economics

Date Written: August 1, 2012

Abstract

Discussions on how to organize European labour markets are one of the key public policy issues of today. In European policy debates, the most important concepts seem to be ‘flexicurity’ and the ‘transitional labour market.’ In this report we examine the cross-country variation in the generosity of unemployment benefits, which is a key element of the flexicurity model. Building on the political economy literature, we test hypotheses on the role of partisan politics, employment relations and employment protection legislation and active labour market policies in unemployment benefit reform. These factors have been extensively studied in the political economy literature, but hardly for Eastern European countries, because of a lack of data. We employ pooled time series cross-section regressions to analyze newly constructed indicators for Western and Eastern European countries. The results indicate that left-wing governments are positively related to unemployment protection for both Western and Eastern European countries, but this linkage is conditional on the economic situation. Coordinated bargaining by strong and centrally organized labour unions has also a positive impact on benefit generosity. Moreover, we find a negative relationship between the strictness of employment protection legislation and the generosity of unemployment benefit schemes, which is in line with the concept of the flexicurity model. Finally, within the EU we find a trend of convergence of unemployment benefit levels in the period 1990-2009. This finding indicates that the new EU member states have caught up.

Keywords: unemployment benefits, partisan politics, political economy, labour market, welfare state reform

JEL Classification: H53, H55, J50, J51, J58, J65, P16, P20, P26, P30, P50

Suggested Citation

van Vliet, Olaf and Caminada, Koen and Goudswaard, Kees, The Political Economy of Labour Market Policies in Western and Eastern European Countries (August 1, 2012). Neujobs Working Paper No. D6.3/August 2012. Available at SSRN: https://ssrn.com/abstract=2154888 or http://dx.doi.org/10.2139/ssrn.2154888

Olaf Van Vliet (Contact Author)

Leiden University - Leiden Law School ( email )

Steenschuur 25 PO Box 9520
Leiden, 2300 RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

Leiden University - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

Koen Caminada

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands
++31715277858 (Phone)

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/caminada.html

Kees Goudswaard

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
92
Abstract Views
598
rank
299,230
PlumX Metrics