The Political Economy of Job Protection and Income Redistribution

Arbeitspapier

This paper presents a model allowing to analyze voting, welfare institutions and economic performance. We consider a political economy framework with three classes of agents: entrepreneurs, employed workers and unemployed workers. Agents vote on alternative institutional options: the degree of labour market flexibility and the intensity of redistribution. We show that the welfare state configuration depends on the nature of the political system ? majoritarian, coalition, two-party. Because internationalization reduces the possibility for national government to effectively tax profits, the existing political coalition is fragilized by the process of globalization. The model generates results concerning the macroeconomic equilibrium employment level. Hence we can assess the effects of internationalization on macroeconomic performance. The impact of internalization depends on the nature of the political system (majoritarian versus coalition government) and on the institutional configuration (positive flexibility versus positive redistribution).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 1404

Classification and Topics

• Classification: Wirtschaft ; Labor Contracts ; Social Security and Public Pensions ; Unemployment Insurance; Severance Pay; Plant Closings ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: job security ; redistribution ; political equilibriums ; unemployment ; Arbeitsmarktflexibilisierung ; Kündigungsschutz ; Einkommensumverteilung ; Public Choice ; Politisches System ; Theorie der Arbeitslosigkeit ; Globalisierung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Amable, Bruno ; Gatti, Donatella
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/20702
• Last update: 10.03.2025, 11:44 AM CET