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Service cheques in Europe - a model for Germany? Employment effects and macro-economic costs: five scenarios

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  • Finger, Dirk

Abstract

In the mid-nineties, near all european governments look almost desperately for a panacea against sluggish growth and high unemployment. Since this problem concerns mainly low-skilled workers, the creation of low-profile jobs in the personal service sector still seems to be one of the most promising solutions. After a long period of scepticism dominating economic thinking about the growth potential of this sector, a renaissance of the service-idea is taking place at the moment. The so called service cheque finds itself at the centre of this new policy approach. Its objective is twofold: to subsidize demand and to reduce the cost of labour. After France and Belgium, Germany is the third country introducing it at a large scale. The findings of this essay back up the opinion that direct welfare benefits, promoting the use of service-cheques, are preferable to those that rely on tax-relief incentives. On the other hand, the idea to provide households with a special welfare benefit in terms of service-cheques could prove risky once the system's high elasticity of output provokes uncontrollable budget deficits. Alternative models should therefore also be considered.

Suggested Citation

  • Finger, Dirk, 1997. "Service cheques in Europe - a model for Germany? Employment effects and macro-economic costs: five scenarios," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 97-201a, WZB Berlin Social Science Center.
  • Handle: RePEc:zbw:wzblpe:fsi97201a
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    1. Victor R. Fuchs, 1968. "The Service Economy," NBER Books, National Bureau of Economic Research, Inc, number fuch68-1, February.
    2. Victor R. Fuchs, 1968. "Some Implications of the Growth of a Service Economy," NBER Chapters, in: The Service Economy, pages 183-199, National Bureau of Economic Research, Inc.
    3. Thurow, Lester C, 1978. "Psychic Income: Useful or Useless?," American Economic Review, American Economic Association, vol. 68(2), pages 142-145, May.
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    1. O'Reilly, Jacqueline & Spee, Claudia, 1997. "Regulating work and welfare of the future: Towards a new gender contract?," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 97-207, WZB Berlin Social Science Center.

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