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Squandering European Labour: Social Safety Nets in Times of Economic Turbulence

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  • Lars Ljungqvist

Abstract

This paper reviews the argument that high long‐term unemployment in Europe is caused by generous social safety nets in times of economic turbulence. We report on the empirical evidence of a more turbulent economic environment and present the theoretical arguments that establish a link between turbulence and high unemployment. We conclude that a cure to the European unemployment problem must entail a reform of the unemployment insurance system so that benefits decline over the unemployment spell. If the social consensus in Europe makes it difficult to implement declining benefits, we suggest that a complementary way of providing incentives for the unemployed would be to reduce their leisure by imposing work requirements.

Suggested Citation

  • Lars Ljungqvist, 1999. "Squandering European Labour: Social Safety Nets in Times of Economic Turbulence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 367-388, September.
    • Handle: RePEc:bla:scotjp:v:46:y:1999:i:4:p:367-388
    DOI: 10.1111/1467-9485.00139
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    Cited by:

    1. Peichl, Andreas & Siegloch, Sebastian, 2012. "Accounting for labor demand effects in structural labor supply models," Labour Economics, Elsevier, vol. 19(1), pages 129-138.
    2. Lars Ljungqvist, 2010. "Unemployment Crisis - Challenge and Opportunity," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(01), pages 7-13, April.
    3. Lars Ljungqvist & Thomas J. Sargent, 2010. "How Sweden's Unemployment Became More Like Europe's," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 189-223, National Bureau of Economic Research, Inc.
    4. Tajammal Hussain & Rick Edgeman & Mohamad Najem AlNajem, 2023. "Exploring the Intellectual Structure of Research in Organizational Resilience through a Bibliometric Approach," Sustainability, MDPI, vol. 15(17), pages 1-28, August.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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