Taxation, Wage Bargaining, and Unemployment

This book explains cross-national and temporal changes in employment outcomes.

Isabela Mares (Author)

9780521674119, Cambridge University Press

Paperback, published 13 February 2006

290 pages, 16 tables
22.9 x 15.2 x 1.7 cm, 0.43 kg

"The book makes a highly original attempt to account for the secular rise of permanent long-term unemployment in European countries, by incorporating the maturation of the welfare state as an important additional factor in current theories of wage formation. Linking collective bargaining and social policy in a novel way, Mares opens new perspectives on the politics of Social Pacts during the 1990s." Wolfgang Streeck, Max Planck Institute for the Study of Societies

Why were European economies able to pursue the simultaneous commitment to full employment and welfare state expansion during the first decades of the postwar period and why did this virtuous relationship break down during recent decades? This book provides an answer to this question, by highlighting the critical importance of a political exchange between unions and governments, premised on wage moderation in exchange for the expansion of social services and transfers. The strategies pursued by these actors in these political exchanges are influenced by existing wage bargaining institutions, the character of monetary policy and by the level and composition of social policy transfers. The book demonstrates that the gradual growth in the fiscal burden has undermined the effectiveness of this political exchange, lowering the ability of unions' wage policies to affect employment outcomes.

Introduction: does the welfare state hurt unemployment
1. The economic and political consequences of welfare state maturation
2. A quantitative analysis
3. Sweden
4. Germany
5. Britain
Conclusion: new social pacts in contemporary Europe.

Subject Areas: Political economy [KCP], Labour economics [KCF], Politics & government [JP], Social welfare & social services [JKS]