Labour Market Insiders Research Articles

Globalisierung und die Veränderung sozialer Ungleichheiten in modernen Gesellschaften

This article deals with the effects of globalization on individual life courses and employment careers and the resulting changes in patterns of social inequality in modern societies. Empirically, we draw back to results from the international research project GLOBALIFE which studied the effects of globalization on modern life courses for the first time. The results show that the effects of globalization on individual life courses show marked differentiation with regards to specific life course phases: while especially the employment of mid-career men remained considerably stable under globalization, the careers of young adults, mid-career women as well as late-career workers underwent significant alterations. At the same time, results from the GLOABLIFE study indicate that the changes induced by globalization have not yet led to identical results at the national level. Globalization appears to be differentially filtered by deeply embedded and path-dependent national institutions. These “institutional packages” entail variable forms of labour market “flexibilisation” which themselves differentially shape patterns of social inequality in modern societies: While Scandinavian countries have largely succeeded in limiting an increase in social inequality under globalization through active public welfare engagement, globalization has led to a significant amplification of social inequalities in other regime types, either between labour market insiders and outsiders (in conservative and Southern European countries) or between individuals with different human capital resources (in liberal countries).

Monopoly Rights Can Reduce Income Big Time

We ask for which part of the observed cross‐country dierences in the level of per‐capita income monopoly rights can account. We answer this question in a calibrated growth model with capital. Monopoly rights in the capital‐producing sector shield labor market insiders from the competition by outsiders and permit coalitions of these insiders to choose inecient technologies or working practices. We find that monopoly rights can reduce the level of per‐capita income by quantitatively substantial amounts that are much larger than previously claimed. Moreover, the eects of monopoly rights on the price of capital goods relative to consumption goods and the investment share in output are quantitatively consistent with the Penn World Tables. The key to our findings is that monopoly rights in the capital‐producing sector do not only reduce total factor productivity there but also increase the relative price of capital. This reduces the capital‐labor ratio in the rest of the economy.

A nonnormative theory of inflation and central bank independence

A Nonnormative Theory of Inflation and Central Bank Independence. — The authors study monetary policy under different central bank constitutions when the labor-market insiders set the minimal wage so that the outsiders are involuntarily unemployed. If the insiders are in the majority, the representative insider will be the median voter. The authors show that an independent central bank, if controlled by the median voter, does not produce a systematic inflation bias, albeit equilibrium employment is too low from a social welfare point of view. A dependent central bank, in contrast, is forced by the government to collect seigniorage and to take the government’s re-election prospects into account. The predictions of their theory are consistent with the evidence that central bank independence decreases average inflation and inflation variability, but does not affect employment variability.