Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgements
- List of conference participants
- 1 Introduction
- PART ONE GENERAL POLICY ISSUES
- PART TWO DEMAND MANAGEMENT AND SUPPLY-SIDE POLICY
- PART THREE SUBSIDISING EMPLOYMENT AND TRAINING
- 6 The simple economics of benefit transfers
- Discussion
- Discussion
- 7 Wage subsidy programmes: alternative designs
- Discussion
- Discussion
- 8 Technological development, competition from low-wage economies and low-skilled unemployment
- Discussion
- 9 Macroeconomic and policy implications of shifts in the relative demand for skills
- Discussion
- 10 Would cutting payroll taxes on the unskilled have a significant impact on unemployment?
- Discussion
- 11 Preventing long-term unemployment: an economic analysis
- Discussion
- Discussion
- PART FOUR LABOUR MARKET REGULATIONS
- PART FIVE POLICY, JOB REALLOCATION AND THE UNEMPLOYMENT–PRODUCTIVITY RELATION
- PART SIX COMPARING UNEMPLOYMENT POLICIES
- Index
6 - The simple economics of benefit transfers
Published online by Cambridge University Press: 07 September 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgements
- List of conference participants
- 1 Introduction
- PART ONE GENERAL POLICY ISSUES
- PART TWO DEMAND MANAGEMENT AND SUPPLY-SIDE POLICY
- PART THREE SUBSIDISING EMPLOYMENT AND TRAINING
- 6 The simple economics of benefit transfers
- Discussion
- Discussion
- 7 Wage subsidy programmes: alternative designs
- Discussion
- Discussion
- 8 Technological development, competition from low-wage economies and low-skilled unemployment
- Discussion
- 9 Macroeconomic and policy implications of shifts in the relative demand for skills
- Discussion
- 10 Would cutting payroll taxes on the unskilled have a significant impact on unemployment?
- Discussion
- 11 Preventing long-term unemployment: an economic analysis
- Discussion
- Discussion
- PART FOUR LABOUR MARKET REGULATIONS
- PART FIVE POLICY, JOB REALLOCATION AND THE UNEMPLOYMENT–PRODUCTIVITY RELATION
- PART SIX COMPARING UNEMPLOYMENT POLICIES
- Index
Summary
Introduction
Having plowed the field, the farmer and his son maneuver the tractor across the adjoining road. Suddenly they see a Jaguar speeding towards them at 100 mph. A second before expected impact, the Jaguar veers into the field, skids through a cloud of dust, regains the road and flies off into the distance. The farmer turns to the boy and says, ‘Son, we left that field just in time.’
The spirit of this tale goes a long way towards explaining the evolution of unemployment policy in many EC countries and elsewhere. The policy is to pay people when they are unemployed and tax them when they find jobs. So, far from inducing workers to seek employment and firms to take them on, the policy in fact discourages them from doing so and thereby contributes to the unemployment problem. Having done so, the unemployment benefit system is then seen as particularly essential in providing a safety net for those out of work. This is not the only occasion on which economic policy creates the problem it is meant to solve, but it is particularly unconscionable in times of recession, when unemployment becomes a flagrant waste of human resources.
If the money governments spend on unemployment benefit could be redirected so as to provide an incentive, rather than a disincentive, for employment, many countries struggling with the twin burdens of high unemployment and costly unemployment benefits might reap a substantial benefit.
- Type
- Chapter
- Information
- Unemployment PolicyGovernment Options for the Labour Market, pp. 163 - 198Publisher: Cambridge University PressPrint publication year: 1997
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