SSE/EFI Working Paper Series in Economics and Finance
No 321:
Squandering European Labor: Social Safety Nets in Times of Economic Turbulence
Lars Ljungqvist ()
Abstract: This paper reviews the argument that high long-term
unemployment in Europe is caused by generous social safety nets in times of
economic turbulence. We report on the empirical evidence of a more
turbulent economic environment and present the theoretical arguments that
establish a link between turbulence and high unemployment. We conclude that
a cure to the European unemployment problem must entail a reform of the
unemployment insurance system so that benefits decline over the
unemployment spell. If the social consensus in Europe makes it difficult to
implement declining benefits, we suggest that a complementary way of
providing incentives for the unemployed would be to reduce their leisure by
imposing work requirements.
Keywords: European unemployment; economic turbulence; unemployment insurance; (follow links to similar papers)
JEL-Codes: E24; (follow links to similar papers)
30 pages, May 31, 1999
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- This paper is published as:
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Ljungqvist, Lars, (1999), 'Squandering European Labor: Social Safety Nets in Times of Economic Turbulence', Scottish Journal of Political Economy, Vol. 46, September, No. 4, pages 367-388
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