Reforming the Liberal Welfare State: International Shocks, Unemployment and Household Income Shares

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Abstract

We examine how labour market and welfare state reforms affect long-run unemployment and the dynamic behaviour of an economy characterised by a liberal welfare state system in response to international shocks. The shares of different income sources in household income shed light on the distributional impact of policy reforms and shocks. Reform packages exist that can improve upon the labour market outcomes of a liberal welfare state system. Even when reducing labour market flexibility and steady-state unemployment, flexicurity reforms appear to lead to a higher volatility in unemployment and GDP in response to exogenous foreign shocks; training expenditure, by improving firms’ productivity, can however reduce these effects.
Original languageEnglish
PublisherUniversity of Aberdeen Business School
Pages1-41
Number of pages41
Publication statusPublished - May 2017

Publication series

NameDiscussion Paper in Economics
PublisherUniversity of Aberdeen
No.6
Volume17
ISSN (Electronic)0143-4543

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Keywords

  • welfare state reforms
  • flexicurity
  • unemployment

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Molana, H., Montagna, C., & Onwordi, G. E. (2017). Reforming the Liberal Welfare State: International Shocks, Unemployment and Household Income Shares. (pp. 1-41). (Discussion Paper in Economics; Vol. 17, No. 6). University of Aberdeen Business School.