archive of the former site EconWPA.wustl.edu

Please do not link or reference this page. Use one of the following URLs:
econpapers.repec.org as http://econpapers.repec.org/paper/wpawuwpma/9509001.htm
ideas.repec.org as http://ideas.repec.org/p/wpa/wuwpma/9509001.html

On the political economy of employment in the welfare state

 
Paper:ewp-mac/9509001
From: Thomas Cool <   > 
Date: Mon, 25 Sep 1995 10:26:43 +0200
Date (revised): Tue, 03 Oct 1995 20:47:58 +0200

Abstract:
OECD tax policy is to have low exemption. This causes high gross minimum wages. Abolishing taxes below the gross minimum would not cost anything, since people may not work below that minimum, and thus dont earn and dont pay taxes, anyway. Present-day unemployment is inefficient, and thus there exists a Pareto improving alternative that is not exploited. For example, in Holland 25% of the labour force is on some benefit. This situation may require an abstract analysis as follows: The central questions in the political economy of employment in the welfare state are: CAN one solve unemployment, does one KNOW how, and does one WANT to? Here, a BHL-model (pronounced BEACHLY) satisfies stylized facts and serves for theoretical and empirical answers. Three types of agents give the letters BHL: Benefit recipients at social subsistence, and High and Low productivity workers. A welfare state is non-revolutionary when the BHL values are stable across regimes. The first result is a possibility theorem (CAN) that under non-revolutionarity there are two regimes of either full employment or unemployment. The second theorem explains the choice by KNOW and WANT causes. Full employment results from conscious choice or chance (while lacking knowledge). Unemployment results from from conscious choice or wrong co-ordination; in the latter case a Pareto improving change is blocked only by lack of knowledge. These theorems provide an explanation for the full employment (1950-70, Japan/Sweden) and unemployment (other) regimes. A policy conclusion is to improve informational procedures.

Postscript files:(viewing .ps)
      archive: 9509001.ps  or 9509001.ps.gz  is 70153 bytes, 8-23-97.
Acrobat pdf files:(viewing .pdf)
      archive: 9509001.pdf  is 99758 bytes, 9-4-95, or 9509001.pdf.gz 
Access statistics for this paper at LogEc which is a part of the RePEc project as was/is EconWPA.
Translate to another language with babel.altavista.com EconWPA reference ewp-mac/9509001
RePEc reference RePEc:wpa:wuwpma:9509001 send e-mail to

EconWPA began as a conversation between Bob Parks and Larry Blume on January 28, 1993. I located Paul Ginsparg's archive (then xxx.lanl.gov) and he graciously installed his software on a Sun Sparc system which was supporting the department of economics email and computation. EconWPA began accepting papers July 1, 1993 and had ftp, email, gopher and web interfaces. The web interface for submissions was engineered into existence in July 1995. A complete and catastrophic machine failure in 1999 caused the loss of EconWPA's email new paper announcment service at which time there were over 15,000 subscriptions with over 8,000 unique email addresses.

In 2005, Arts and Sciences commandeered the computing services that I had provided to the Department of Economics since 1987. Some might say that the department was sold out, others would (erroneously) claim that centralization is efficient, and still others would claim that I have few marketing skills.

I was told that I could keep operating EconWPA (as well as many other services including rfe.wustl.edu, barnett.wustl.edu, and three RePEc servers) but I would receive no support (hardware, software, or anthing else) and (as had been the case) no compensation. At that point, given the apparent low valuation of my activities by the department, and university, it made no sense for me to continue operating EconWPA or other services.

Thanks to all who have supported EconWPA in the past.

A Chinese curse states May you live in intersting times. I have. Bob Parks - Jan 2006