IDEAS home Printed from https://ideas.repec.org/p/lis/liswps/472.html
   My bibliography  Save this paper

Government Benefits, Inequality and Employment

Author

Listed:
  • Lane Kenworthy

Abstract

Redistribution is one of the principal mechanisms through which countries secure low income inequality. Maintaining moderately high wage levels at the low end of the distribution may be increasingly difficult and perhaps even counterproductive from an egalitarian perspective. If so, redistribution is likely to become even more critical. Redistribution can be achieved through the tax system, via government transfers, or both. In practice, however, very little redistribution is accomplished via taxation, and a shift toward greater use of taxes to achieve redistributive ends is unlikely. Benefits, therefore, may be the key to successful pursuit of low inequality for affluent countries. But generous benefits can create employment disincentives. This produces a bind for policy makers. Generous benefits secure the redistribution countries need to get low inequality. Because of aging and capital mobility, a high employment rate is needed to finance those benefits. But if benefits are generous, they may reduce the employment rate. Is there a way out of this dilemma?

Suggested Citation

  • Lane Kenworthy, 2008. "Government Benefits, Inequality and Employment," LIS Working papers 472, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:472
    as

    Download full text from publisher

    File URL: http://www.lisdatacenter.org/wps/liswps/472.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
    2. Agell, Jonas, 1999. "On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance," Economic Journal, Royal Economic Society, vol. 109(453), pages 143-164, February.
    3. John Myles & Paul Pierson, "undated". "Friedman's Revenge: The Reform of "Liberal" Welfare States In Canada and the United States," Canadian International Labour Network Working Papers 06, McMaster University.
    4. Anders Bjorklund & Richard B. Freeman, 1997. "Generating Equality and Eliminating Poverty, the Swedish Way," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 33-78, National Bureau of Economic Research, Inc.
    5. Timothy Smeeding, 2004. "Public Policy and Economic Inequality: The United States in Comparative Perspective," LIS Working papers 367, LIS Cross-National Data Center in Luxembourg.
    6. Mike Brewer, 2001. "Comparing in-work benefits and the reward to work for families with children in the US and the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 22(1), pages 41-77, January.
    7. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    8. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084, Elsevier.
    9. Crepaz, Markus M. L., 2002. "Duane Swank, Global Capital, Political Institutions, and Policy Change in Developed Welfare States. Cambridge University Press, Cambridge, 2002," Journal of Public Policy, Cambridge University Press, vol. 22(01), pages 101-106, January.
    10. Lyle Scruggs & James Allan, 2005. "The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries," LIS Working papers 409, LIS Cross-National Data Center in Luxembourg.
    11. Andersen, Torben M., 2004. "Challenges to the Scandinavian welfare model," European Journal of Political Economy, Elsevier, vol. 20(3), pages 743-754, September.
    12. Layard, Richard & Nickell, Stephen, 2003. "Full employment is not just a dream," LSE Research Online Documents on Economics 47439, London School of Economics and Political Science, LSE Library.
    13. Swank,Duane, 2002. "Global Capital, Political Institutions, and Policy Change in Developed Welfare States," Cambridge Books, Cambridge University Press, number 9780521001441, September.
    14. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    15. Saul D. Hoffman & Laurence S. Seidman, 2003. "Helping Working Families: The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number hwf.
    16. Lane Kenworthy & Jonas Pontusson, 2005. "Rising Inequality and the Politics of Redistribution in Affluent Countries," LIS Working papers 400, LIS Cross-National Data Center in Luxembourg.
    17. Andrew Leigh, 2005. "Optimal Design of Earned Income Tax Credits: Evidence from a British Natural Experiment," CEPR Discussion Papers 488, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    18. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Social, Employment and Migration Working Papers 35, OECD Publishing.
    19. Hicks, Alexander & Zorn, Christopher, 2005. "Economic Globalization, the Macro Economy, and Reversals of Welfare: Expansion in Affluent Democracies, 1978–94," International Organization, Cambridge University Press, vol. 59(3), pages 631-662, July.
    20. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
    21. Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW Kiel).
    22. Richard B. Freeman & Robert Topel & Birgitta Swedenborg, 1997. "The Welfare State in Transition: Reforming the Swedish Model," NBER Books, National Bureau of Economic Research, Inc, number free97-1.
    23. Joakim Palme & Walter Korpi, 1998. "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries," LIS Working papers 174, LIS Cross-National Data Center in Luxembourg.
    24. Swank,Duane, 2002. "Global Capital, Political Institutions, and Policy Change in Developed Welfare States," Cambridge Books, Cambridge University Press, number 9780521806688, September.
    25. Freeman, Richard B. & Topel, Robert H. & Swedenborg, Birgitta (ed.), 1997. "The Welfare State in Transition," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261782, August.
    26. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
    27. Lane Kenworthy, 1998. "Do Social-Welfare Policies Reduce Poverty? A Cross-National Assessment," LIS Working papers 188, LIS Cross-National Data Center in Luxembourg.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alfred Stiglbauer, 2006. "The (New) OECD Jobs Study: Introduction and Assessment," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 58-74.
    2. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 833-867, October.
    3. Huo, Jingjing, 2015. "How Nations Innovate: The Political Economy of Technological Innovation in Affluent Capitalist Economies," OUP Catalogue, Oxford University Press, number 9780198735847.
    4. Duane Swank, 2015. "The Political Foundations of Redistribution in Post-industrial Democracies," LIS Working papers 653, LIS Cross-National Data Center in Luxembourg.
    5. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2001. "Comparative Analysis of Labor Market Outcomes: Lessons for the US from International Long-Run Evidence," NBER Working Papers 8526, National Bureau of Economic Research, Inc.
    6. Vincent Mahler & David Jesuit, 2004. "State Redistribution in Comparative Perspective: A Cross-National Analysis of the Developed Countries," LIS Working papers 392, LIS Cross-National Data Center in Luxembourg.
    7. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    8. Gayle Allard & Peter H. Lindert, 2006. "Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?," NBER Working Papers 12460, National Bureau of Economic Research, Inc.
    9. David R. Howell & Dean Baker & Andrew Glyn & John Schmitt, 2006. "Are Protective Labor Market Institutions Really at the Root of Unemployment? A Critical Perspective on the Statistical Evidence," CEPR Reports and Issue Briefs 2006-14, Center for Economic and Policy Research (CEPR).
    10. Lane Kenworthy, 2008. "Sources of Equality and Inequality: Wages, Jobs, Households, and Redistribution," LIS Working papers 471, LIS Cross-National Data Center in Luxembourg.
    11. Lane Kenworthy, 2010. "The High-Employment Route to Low Inequality," LIS Working papers 538, LIS Cross-National Data Center in Luxembourg.
    12. Lyle Scruggs & James Allan, 2005. "The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries," LIS Working papers 409, LIS Cross-National Data Center in Luxembourg.
    13. Schulze-Cleven, Tobias, 2006. "The Politics of an Experimental Society: Creating Labor Market Flexibility in Europe," Institute for Research on Labor and Employment, Working Paper Series qt92x040tt, Institute of Industrial Relations, UC Berkeley.
    14. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
    15. Lawrence M. Kahn, 2012. "Labor market policy: A comparative view on the costs and benefits of labor market flexibility," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 94-110, December.
    16. Forslund, Anders, 2009. "Labour supply incentives, income support systems and taxes in Sweden," Working Paper Series 2009:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    17. Horst Feldmann, 2013. "Technological unemployment in industrial countries," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1099-1126, November.
    18. Francois Nielsen & David Bradley & John D. Stephens & Evelyne Huber & Stephanie Moller, 2001. "The Welfare State and Gender Equality," LIS Working papers 279, LIS Cross-National Data Center in Luxembourg.
    19. Ursula Dallinger, 2015. "Public redistribution and voter demand – The middle class as a modern Robin Hood?," LIS Working papers 630, LIS Cross-National Data Center in Luxembourg.
    20. Gustav A. Horn & Heike Joebges & Torsten Niechoj & Christian R. Proaño & Simon Sturn & Silke Tober & Achim Truger & Till van Treeck, 2009. "Von der Finanzkrise zur Weltwirtschaftskrise (I)," IMK Report 38-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lis:liswps:472. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Paradowski (email available below). General contact details of provider: https://edirc.repec.org/data/lisprlu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.