The Political Economy of Job Protection and Income Redistribution

No 1404, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents a model allowing to analyze voting, welfare institutions and economic performance. We consider a political economy framework with three classes of agents: entrepreneurs, employed workers and unemployed workers. Agents vote on alternative institutional options: the degree of labour market flexibility and the intensity of redistribution. We show that the welfare state configuration depends on the nature of the political system - majoritarian, coalition, two-party. Because internationalization reduces the possibility for national government to effectively tax profits, the existing political coalition is fragilized by the process of globalization. The model generates results concerning the macroeconomic equilibrium employment level. Hence we can assess the effects of internationalization on macroeconomic performance. The impact of internalization depends on the nature of the political system (majoritarian versus coalition government) and on the institutional configuration (positive flexibility versus positive redistribution).

Keywords: political equilibriums; redistribution; job security; unemployment (search for similar items in EconPapers)
JEL-codes: H55 I38 J41 J65 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-11
New Economics Papers: this item is included in nep-pbe and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://docs.iza.org/dp1404.pdf (application/pdf)

Related works:
Working Paper: The political economy of job protection and income redistribution (2005)
Working Paper: The political economy of job protection and income redistribution (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1404

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().