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

Author

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  • Ljungqvist, Lars

    (Dept. of Economics, Stockholm School of Economics)

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

  • Ljungqvist, Lars, 1999. "Squandering European Labor: Social Safety Nets in Times of Economic Turbulence," SSE/EFI Working Paper Series in Economics and Finance 321, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0321
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    Cited by:

    1. 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.
    2. 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.
    3. Peichl, Andreas & Siegloch, Sebastian, 2012. "Accounting for labor demand effects in structural labor supply models," Labour Economics, Elsevier, vol. 19(1), pages 129-138.
    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

    Keywords

    European unemployment; economic turbulence; unemployment insurance;
    All these keywords.

    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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