Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20702
Authors: 
Amable, Bruno
Gatti, Donatella
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1404
Abstract: 
This paper presents a model allowing to analyze voting, welfare institutions and economic performance. We consider a political economy framework with three classes of agents: entrepreneurs, employed workers and unemployed workers. Agents vote on alternative institutional options: the degree of labour market flexibility and the intensity of redistribution. We show that the welfare state configuration depends on the nature of the political system ? majoritarian, coalition, two-party. Because internationalization reduces the possibility for national government to effectively tax profits, the existing political coalition is fragilized by the process of globalization. The model generates results concerning the macroeconomic equilibrium employment level. Hence we can assess the effects of internationalization on macroeconomic performance. The impact of internalization depends on the nature of the political system (majoritarian versus coalition government) and on the institutional configuration (positive flexibility versus positive redistribution).
Subjects: 
job security
redistribution
political equilibriums
unemployment
JEL: 
J41
H55
J65
I38
Document Type: 
Working Paper

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