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Ever since the 1970s, the problem of unemployment has defined politics in Western Europe, but governments have responded in different ways. In the 1970s and 1980s, some governments used macroeconomic policy to support domestic economic activity and maintain full employment. In the 1990s and 2000s, on the other hand, some governments made large labor market policy changes to ensure that the unemployed were looking for jobs, well-trained, and matched with employers willing to hire them. Comparing Austria, Denmark, the Netherlands, and Sweden, this book shows that governments made different choices because of underlying political differences: the development of party systems, corporatism, and norms regarding the purpose of political authority. Low unemployment was the linchpin of political arrangements in Western Europe after the Second World War. When mass unemployment became a threat again in the 1970s, Austria and Sweden – where the post-war political order remained intact – used economic policies to preserve full employment. In the 1990s and 2000s, governments in Denmark and the Netherlands – who had lived with high unemployment for a long period of time and reformed their political models in the course of the 1980s – undertook far-reaching labor market policy changes.

This book on Flexicurity Capitalism provides four rigorously formulated approaches to an analysis of the current and future evolution of capitalism from a Marx-Keynes and Kalecki- Schumpeter (MKS) perspective. It does so in self-contained ways, focusing on macrodynamical models of the working of modern capitalist societies in the tradition of Classical and Keynesian authors, augmented by a modern reformulation of Schumpeterian ’Competitive Socialism’, the flexi(bility-se)curity approach currently intensively debated in the EU area. On this basis the book provides a novel approach to the study of the future of capitalism, a topic that has never been more important than now -- since the prosperity phase after World War II. It supplies an alternative to those discussions of current forms of capitalism which focus on the status quo of such economies, instead of providing an ideal scenario first, on the basis of which compromises between the status quo and the 'ideal' can be discussed. The employed modelling approaches, of an advanced type, are aimed at the post-graduate level of economic teaching. The chapters of the book can be utilised independently of each other but, nevertheless, provide a unique approach to macrodynamic theorizing that is firmly rooted in the MKS tradition of the understanding of the growth dynamics of capitalist economies.

Most economists think that unemployment is high in Europe because of rigid labour market institutions such as minimum wages, unemployment benefits, and employment protection. The book develops a theory of labour market institutions as the outcome of the political process. A central hypothesis is that they will be chiefly determined by the interests of employed workers with intermediate skill levels. We show that redistributive conflict between these workers and more skilled workers may lead to an outcome where a set of rigid institutions arise. We analyse why reform may be difficult because of status‐quo bias, and discuss how it may nevertheless be implemented by choosing an appropriate design or timing for the reform.

This book surveys the main events in the international economy from the outbreak of the First World War to the end of the Second World War: a period of time variously defined as the “globalization backlash”, the “Second Thirty Years War”, or simply “the World in Depression”. The book starts with the unfortunate peace settlement after the First World War and progresses to the ensuing hyperinflations and financial crises; from the attempts at rebuilding an international economic and monetary order in the face of rapid technical progress and productivity growth to the policy mistakes that brought about the Great Depression — the most devastating economic depression in human history; from wide-spread long-term unemployment to overall autarky and a second global conflagration. The opening chapter puts the interwar years in the long-term quantitative perspective of economic development over the whole of the 20th century while the final chapter highlights the long-run impact of the interwar years on the growth and policy features of the prosperous decades that followed the end of the Second World War.

In recent decades, the share of service employment has increased greatly across Europe, fundamentally changing the structure of European labour markets and the nature of the economic risks that individual workers face. This book explores how far reforms to unemployment protection systems, which were introduced and consolidated in a very different labour market context, are responding to the particular challenges of post-industrial labour markets. It argues that adapting traditional systems of unemployment protection to the risk profiles of service-based economies requires a profound policy realignment, which can be summarized with reference to three overlapping processes of institutional change; the homogenization of unemployment benefit rights for different categories of the unemployed; the erosion of the institutional boundaries between benefit provisions for the unemployed and for other groups of working-age people reliant on state support; and the ever-closer operational integration of income maintenance policies and other forms of labour market support. Systematically comparing across twelve European welfare states over a period of twenty years, the book traces how these reform dynamics have played out in the context of political conflicts, institutional constraints, and changing macroeconomic conditions. While the book highlights that many differences continue to set the unemployment protection arrangements of different European countries apart, it also points to an emergent process of contingent convergence in conceptions of the risk of unemployment and of appropriate ways of regulating it.

This book explores the impact of trade with less developed countries (LDCs) on employment in Europe. It supports the view that trade with LDCs has had limited impact on the labour market. Among its main findings are that trade with LDCs would be less harmful for Europe than for the USA, that the inequality problem in Europe is not wage inequality but the widespread unemployment of unskilled workers, and that technology has contributed to unemployment. The book has nine chapters. The first seven examine the impact of LDC trade on the European labour market; the final two address the social clause problem.

Introduces methodological tools for dynamic analysis of macroeconomic phenomena: consumption and investment choices, employment, and unemployment outcomes, and economic growth. Discrete‐time dynamic optimization under uncertainty is introduced in Ch. 1 and applied to intertemporal consumption theory, with particular attention to empirical implementation. Chapter 2 focuses on continuous‐time optimization techniques and discusses the relevant insights in the context of partial equilibrium investment models. Chapter 3 applies previous chapters’ tools to dynamic labour demand, deriving the labour market equilibrium when both firms and workers face dynamic adjustment problems. Chapter 4 studies continuous‐time equilibrium dynamics of representative‐agent economies featuring both consumption and investment choices, with applications to long‐run growth issues. The role of externalities in more recent models of endogenous growth is carefully discussed. Chapter 5 studies the determination of aggregate equilibria in markets with decentralized trading, discussing the possibility of coordination failures and multiple equilibria. A search model of the labour market, focussed on the flows into and out of unemployment, is then analyzed and the dynamics of frictional unemployment are discussed. Many exercises can be found both within and at the ends of chapters, with extended solutions.

Increasing labour market flexibility is at the top of the European agenda. A new and challenging view is that a lack of mobility in the labour market may arise from rigidities in the housing market. Researches in this book have been inspired by the intriguing hypothesis that homeownership may be a hindrance to the smooth working connections of labour markets, as homeowners tend to be less willing to accept jobs outside their own region. At the individual level, homeownership limits the likelihood of becoming unemployed and increases the probability of finding a job once unemployed. The transaction costs inherent in the housing market and homeownership hamper job-to-job changes and increase unemployment at the country level. All of these insinuate reform in the housing market, aimed at lowering transaction costs and providing less generous subsidies for homeowners as effective steps for reducing unemployment and improving labour market flexibility.

The book investigates the processes of welfare state reform in the UK and Germany between the late 1970s and 2003. Adopting a programme-level perspective, it systematically compares processes of retrenchment, expansion and restructuring in three core social policy domains. The book suggests that unemployment support and public pension programmes have been subjected to retrenchment and restructuring, while family policies have been extended in both countries. However, patterns of retrenchment and restructuring differ across countries and programmes. Arguing in favour of multi-causal explanations of reform processes and outcomes, the book stresses the relevance of three sets of explanatory factors: shifts in party policy preferences and power relations, three institutional variables and contingent factors impinging on policy direction and profiles. Within pension policy, the relevance of different institutional characteristics and the respective balance between private and public forms of retirement suggest that the concept of ‘path dependence’ is particularly instructive. By contrast, differences in programme structures and their role within national political economies prove to be most relevant for the understanding of changes in unemployment support policy. Less institutionally embedded and expanding, the trajectories of family policies have to be seen in the context of dynamic party policy preferences.

Modern welfare states developed primarily to meet the ‘old social risks’ that confront the mass of the population during a standard industrial life course – retirement pensions, health care services, sickness and disability provision. Most analysis of the current wave of reforms focusses on these areas, and tends to emphasise retrenchment, restructuring, and decommodification. This book deals with the ‘new social risks’ that have now emerged alongside old social risks from changes in family life and work patterns – needs for child and elder care, new rights for women in relation to paid work, measures to ease the transition into paid work, particularly for unskilled people, and the problems of social exclusion arising for some groups from policies like pension privatisation. It offers an original approach of the implications for national and EU level social policy‐making and contributes to theoretical work in this area. The detailed national case studies are written by national experts and are based on analysis of policy during the past 15 years and more than 250 interviews with key policy actors. The book is organised in a common framework that enables comparison of the significance of different national welfare state regimes and political institutions.

The book shows that (1) The recognition of new social risks and the structuring of policies to meet them are constrained by existing patterns of old social risk provision; (2) The politics of new social risks differs from that of old social risks. Most people are aware of needs in relation to the latter, leading to widespread pressure for more provision. The groups affected by new social risks are smaller, less politically cohesive, and less able to push for change; (3) New social risks policies offer the opportunity for governments to ‘transform vice into virtue’ by expanding the labour force and encouraging previously dependent groups (disabled and unemployed people) into productive work. For this reason, such policies are at the forefront of the EU level welfare reform agenda.