Taxation, Wage Bargaining, and Unemployment (Cambridge Studies in Comparative Politics)

Why were European economies able to pursue the simultaneous commitment to full employment and welfare state expansion during the first decades of the postwar period and why did this virtuous relationship break down during recent decades? This book provides an answer to this question, by highlighting the critical importance of a political exchange between unions and governments, premised on wage moderation in exchange for the expansion of social services and transfers. The strategies pursued by these actors in these political exchanges are influenced by existing wage bargaining institutions, the character of monetary policy and by the level and composition of social policy transfers. The book demonstrates that the gradual growth in the fiscal burden has undermined the effectiveness of this political exchange, lowering the ability of unions' wage policies to affect employment outcomes. This Text Highlights The Critical Importance Of A Political Exchange Between Unions And Governments, Based On Wage Moderation In Exchange For The Expansion Of Social Services. It Demonstrates That The Gradual Growth In The Fiscal Burden Has Undermined The Effectiveness Of This Political Exchange. Introduction: Does The Welfare State Hurt Employment? -- Developments In European Labor Markets: Two Theoretical Perspectives -- The Argument -- The Organization Of The Study -- The Economic And Political Consequences Of Welfare State Maturation -- Labor Market Institutions And Economic Performance -- Labor Market Institutions And Monetary Policy -- A Theoretical Synthesis: Labor Market Institutions, Monetary Policies And The Welfare State -- Looking Ahead -- Appendix -- Equilibrium Prices And Consumption -- Derivation Of Trade Unions' Optimal Wage Demands -- Proofs Of Comparative Statics Results -- Centralization Of The Wage Bargaining System: A Comparison With The Calmfors-driffill Approach -- A Quantitative Analysis -- Testing The Model: Measurement Of The Central Explanatory Variables -- The Dependent Variable: The Employment Performance Of Oecd Economies -- Regression Analysis -- Conclusions -- Sweden: Policy Developments In The Immediate Postwar Years --^ The Rehn-meidner Model -- Wage And Social Policy Developments Of The 1960s -- Strains On The System: Interunion Rivalry, 1970-1976 -- Policy Developments Under Conservative Governments, 1976-1982 -- The Return Of The Social Democrats, 1982-1990 -- The Double Sacrifice: Wage And Social Policy Developments Of The 1990s -- Conclusion -- Germany: The Wage-social Policy Nexus During The Adenauer-erhard Period, 1950-1966 -- Wage Bargaining And Social Policy Developments Under The Grand Coalition, 1966-1969 -- Wage Bargaining And Social Policy Expansion In The Brandt Era, 1969-1974 -- Wage Bargaining And Social Policy Developments Under The Social-liberal Coalition, 1974-1982 -- The Consequences Of Welfare State Maturation: Wage And Social Policy Developments, 1982-1990 -- The Aftermath Of German Reunification, 1990-1997 -- Conclusions -- Britain: Wage Developments Of The Postwar Years, 1945-1950 -- Social Policy And Wage Moderation Under The Conservatives, 1951-1964 --^ The Labor Government, 1964-1970 -- Conservatives Again, 1970-1974 -- The Social Contract, 1974-1979 -- The Conservative Attack On The Social Wage, 1980-1996 -- Welfare State And Labor Market Reforms Under New Labour -- Conclusion -- Conclusion: New Social Pacts In Contemporary Europe -- The Theoretical Argument -- Implications For The Politics Of New Social Pacts. Isabela Mares. Includes Bibliographical References (p. 231-252) And Index. Introduction: does the welfare state hurt employment? Developments in European labor markets: two theoretical perspectives The argument The organization of the study The economic and political consequences of welfare state maturation Labor market institutions and economic performance Labor market institutions and monetary policy A theoretical synthesis: labor market institutions, monetary policies and the welfare state The impact of social policies: labor market outsiders and social services Comparative statics Looking ahead Appendix Equilibrium prices and consumption Derivation of trade unions' optimal wage demands Proofs of comparative statics results Centralization of the wage bargaining system: a comparison with the Calmfors-Driffill approach A quantitative analysis Testing the model: measurement of the central explanatory variables Wage bargaining centralization Monetary non-accommodation The magnitude and composition of welfare state commitments The dependent variable: the employment performance of OECD economies Regression analysis Conclusions Sweden: Policy developments in the immediate postwar years The Rehn-Meidner model Wage and social policy developments of the 1960s Strains on the system: inter-union rivalry, 1970-1976 Policy developments under conservative governments, 1976-1982 The return of the social democrats, 1982-1990 The double sacrifice: wage and social policy developments of the 1990s Conclusion Germany: The wage-social policy nexus during the Adenauer-Erhard period, 1950-1966 Wage bargaining and social policy developments under the Grand coalition, 1966-1969 Wage bargaining and social policy expansion in the Brandt era, 1969-1974 Wage bargaining and social policy developments under the social-liberal coalition, 1974-1982 The consequences of welfare state maturation: wage and social policy developments, 1982-1990 The aftermath of German reunification, 1990-1997 Conclusions Britain: Wage developments of the postwar years, 1945-1950 Social policy and wage moderation under the conservatives, 1951-1964 The Labor government, 1964-1970 Conservatives again, 1970-1974 The social contract, 1974-1979 The conservative attack on the social wage, 1980-1996 Welfare state and labor market reforms under New Labour Conclusion Conclusion: new social pacts in contemporary Europe The theoretical argument Implications for the politics of new social pacts. Why were European economies able to pursue the simultaneous commitment to full employment and welfare state expansion during the first decades of the postwar period? This book highlights the critical importance of a political exchange between unions and governments, premised on wage moderation in exchange for the expansion of social services and transfers. The strategies pursued by these actors in these political exchanges are influenced by existing wage bargaining institutions, the character of monetary policy and by the level and composition of social policy transfers.