Labour market flexibility, risk and uncertainty: the role of social insurance Ágota Scharle [email protected] Budapest Institute for Policy

Labour market flexibility, risk and uncertainty: the role of social insurance

Ágota [email protected]

Budapest Institute for Policy Analysis

Employment, poverty alleviation, migration and social inclusion, 26-27 March 2012, Xi’an

how to respond to increased flexibility: lessons from two earlier shocks

insurance systems have broadened

no clean solution to providing bothincome support and activation

complex systems

some implications for welfare reform

Outline

www.budapestinstitute.eu 26-27 March 2012, Xi’an

flexibility entails structural shifts

shifts are abrubt

oil price shock of 1970s

transition from plan to market in 1990

similar lessons

How to respond to increased flexibility


50

55

60

65

70

75

80

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Denmark

France

reducing labour supply will reduce long term employment as well

protecting jobs will reduce productivity

both are costly / unsustainable (Layard et al 1991, Balla et al 2006)

income support + activation (flexicurity)

Same lessons from two earlier shocks


welfare states’ response to fragmented work histories and families

traditionally: insurance for the male bread winner

new trend: - insurance based and social benefits become similar (Clasen-Clegg 2011)

- activation extended to all working age benefit recipients

Insurance systems broadened


…with much variation across Europe


HU

LV

NO

IT

LU

GR

LT

EE

CY

PT

SI

BE

DK

AT

FIFR

PLSE

DE

SKCZ

IS

NL

UK

20

40

60

80

100

Ka

pcso

lattart

ás

0 10 20 30 40 50Hatókör

coverage

inte

nsity

income support reduces labour supplyactivation meant to increase it

no clean solutionminimum income scheme with - complex rules to reduce welfare trap- job search obligations and sanctions- active labour market measures- personalised measures, case workers

Activation vs income support


financial: negative taxation, earnings disregard, gradual phasing out, reapplying made easierbehavioural: benefit conditional on active job search, taking up job offer, monitoring + sanctions (Kluve et al 2010)

services: - personalised, small scale- often combined with training- counselling (PES to PES Dialogue)

Activations tools


Labour supply response may varyby gender (Mincer 1984, Antecol 2000)

by life cycle: studies, children, retirement (Blundell 2012)

by culture (Antecol 2000, Blau-Kahn 2011)

good benefit design reflects thisrequires empirical research

Variation by country and group


services rather than administration:social workers, psychologist, rehabilitation experts -- not clerks

need empirical research, best if based on controlled experiments e.g. J-PAL

individual level administrative data can reduce cost of experiments/ system

Some implications for welfare reform


For more information please contact me at [email protected]

Thank you for your attention


Antecol (2000): An examination of cross-country differences in the gender gap in labor force participation rates, Labour Economics 7, no. 4, pp 409-426.

Blau and Kahn (2011) Substitution between individual and cultural capital, mimeo http://www.sole-jole.org/12125.pdf

Blundell (2012): Tax policy reform: the role of empirical evidence, J of European Economic Association,10(1) pp 43-77.

Fernández (2008): Culture and Economics, in Steven N. Durlauf and Lawrence E. Blume, eds., The New Palgrave Dictionary of Economics, pp. 333-340.

Kluve-Card-Weber (2010) Active Labor Market Policy Evaluations: a Meta-Analysis, The Economic Journal 2010, 120, F452-F477)

Layard, Nickell, Jackman (1991): Unemployment: Macroeconomic performance and the labour market, Oxford University Press

Mincer (1984) Inter-Country Comparisons of Labor Force Trends and of Related Developments: An Overview, NBER No.1438

References


Documents

Labour market flexibility, risk and uncertainty: the role of social insurance Ágota Scharle [email protected] Budapest Institute for Policy