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Summary
Summary
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.
Author Notes
Isabela Mares is Assistant Professor of Political Science at Stanford University
Reviews 1
Choice Review
Mares (Stanford Univ.) argues that the growth of the welfare state and the taxes it requires have made it more difficult to conduct the kinds of economic bargaining that allowed the wealthy democracies to minimize unemployment rates in the 1950s-60s. Combining advanced statistical techniques and detailed case studies of Sweden, Germany, and Britain since WW II, Mares argues that increasing payroll taxes have made it much harder for unions to restrain employers' wage costs. Nations more successfully restrain joblessness when union-employer bargaining is very centralized or very decentralized. Sweden, where employer-union wage negotiations are highly centralized, has coped with the growing pressures of economic change and the welfare state relatively successfully. Germany has experienced higher unemployment because wage negotiations are conducted at the industry level. Britain has enjoyed a relatively good employment record because negotiations are extremely decentralized; by reducing union power, Britain also encouraged greater wage inequality and worker dependence on labor markets. This smart, skillful study complements Mares' excellent The Politics of Social Risk (CH, Mar'04, 41-4140). ^BSumming Up: Recommended. Graduate and research collections. D. B. Robertson University of Missouri--St. Louis
Table of Contents
List of Figures and Tables | p. xii |
List of Abbreviations | p. xv |
Acknowledgments | p. xvii |
Introduction: Does the Welfare State Hurt Employment? | p. 1 |
Developments in European Labor Markets: Two Theoretical Perspectives | p. 3 |
The Argument | p. 10 |
The Organization of the Study | p. 15 |
1 The Economic and Political Consequences of Welfare State Maturation | p. 17 |
Labor Market Institutions and Economic Performance | p. 19 |
Labor Market Institutions and Monetary Policy | p. 27 |
A Theoretical Synthesis: Labor Market Institutions, Monetary Policies, and the Welfare State | p. 35 |
Looking Ahead | p. 47 |
Appendix | p. 50 |
1 Equilibrium Prices and Consumption | p. 50 |
2 Derivation of Trade Unions' Optimal Wage Demands | p. 52 |
3 Proofs of Comparative Statics Results | p. 56 |
4 Centralization of the Wage Bargaining System: A Comparison with the Calmfors-Driffill Approach | p. 58 |
2 A Quantitative Analysis | p. 61 |
Testing the Model: Measurement of the Central Explanatory Variables | p. 62 |
The Dependent Variable: The Employment Performance of OECD Economies | p. 71 |
Conclusions | p. 81 |
3 Sweden | p. 83 |
Policy Developments in the Immediate Postwar Years | p. 84 |
The Rehn-Meidner Model | p. 87 |
Wage and Social Policy Developments of the 1960s | p. 94 |
Strains on the System: Interunion Rivalry, 1970-1976 | p. 100 |
Policy Developments Under Conservative Governments, 1976-1982 | p. 104 |
The Return of the Social Democrats, 1982-1990 | p. 108 |
The Double Sacrifice: Wage and Social Policy Developments of the 1990s | p. 115 |
Conclusion | p. 126 |
4 Germany | p. 128 |
The Wage-Social Policy Nexus During the Adenauer-Erhard Period, 1950-1966 | p. 129 |
Wage Bargaining and Social Policy Developments Under the Grand Coalition, 1966-1969 | p. 142 |
Wage Bargaining and Social Policy Expansion in the Brandt Era, 1969-1974 | p. 146 |
Wage Bargaining and Social Policy Developments Under the Social-Liberal Coalition, 1974-1982 | p. 151 |
The Consequences of Welfare State Maturation: Wage and Social Policy Developments, 1982-1990 | p. 160 |
The Aftermath of German Reunification, 1990-1997 | p. 167 |
Conclusions | p. 172 |
5 Britain | p. 174 |
Wage Developments of the Postwar Years, 1945-1950 | p. 175 |
Social Policy and Wage Moderation Under the Conservatives, 1951-1964 | p. 179 |
The Labor Government, 1964-1970 | p. 188 |
Conservatives Again, 1970-1974 | p. 194 |
The Social Contract, 1974-1979 | p. 199 |
The Conservative Attack on the Social Wage, 1980-1996 | p. 206 |
Welfare State and Labor Market Reforms Under New Labour | p. 213 |
Conclusion | p. 217 |
Conclusion: New Social Pacts in Contemporary Europe | p. 219 |
The Theoretical Argument | p. 220 |
Implications for the Politics of New Social Pacts | p. 223 |
References | p. 231 |
Index | p. 253 |