Is globalisation undermining the welfare state?

This paper analyses the evolution of the welfare states in themajority of OECD countries during the pre-globalisation (1946–80)and globalisation (1980–2000) periods. Our purpose isto find out whether globalisation has produced a convergencetowards a smaller welfare state, funded increasingly by non-mobilefactors such as labour, property and consumption rather thanby mobile factors such as capital. The data presented here challengethe claims about such a convergence, showing that social publicexpenditures and public employment have continued to expandduring the globalisation period in most OECD countries. We alsoshow that the welfare states remain rooted in the politicaltraditions that have governed them.     

Social investment: A guiding principle for welfare state adjustment after the crisis?

The European welfare states have undergone a significant amount of change over the last decades. In light of the unresolved tensions resulting from changed macroeconomic conditions, the emergence of new social risks as well as from the consequences of the Great Recession and its aftershocks, more adjustments are needed. The present paper investigates the current outlook on welfare state change, retracing its socio-economic drivers and the salient steps that were undertaken to reform welfare states in the last decades. Since the outbreak of the crisis, calls to adopt a social investment perspective on welfare state reform intensified, both in the academic field and at the EU policy-level. Ample space is therefore devoted to the discussion of this perspective, its conceptual basis, and implementation. For a number of reasons, social investment seems the most appropriate approach to frame the objectives that contemporary welfare states have to pursue and to devise a consistent set of policies. The objections which have been moved against the social investment perspective have however to be taken seriously. Moreover, current developments indicate diverging trends across EU Member States, with lack of progress in those countries which are most in need of a social investment strategy. To become an effective policy paradigm, the social investment perspective thus needs a stronger anchoring within the EU architecture and more co-ordinated commitment from Member States.     

Would I lie to you? On social preferences and lying aversion

This paper reinterprets the evidence on lying or deception presented in Gneezy (Am. Econ. Rev. 95(1):384–394, 2005). We show that Gneezy’s data are consistent with the simple hypothesis that people are one of two kinds: either a person will never lie, or a person will lie whenever she prefers the outcome obtained by lying over the outcome obtained by telling the truth. This implies that so long as lying induces a preferred outcome over truth-telling, a person’s decision of whether to lie may be completely insensitive to other changes in the induced outcomes, such as exactly how much she monetarily gains relative to how much she hurts an anonymous partner. We run new but broadly similar experiments to those of Gneezy in order to test this hypothesis. While we also confirm that there is an aversion to lying in our subject population, our data cannot reject the simple hypothesis described above either.

---

Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

How do dimensions of proximity relate to the outcomes of collaboration? A survey of knowledge-intensive networks in the Dutch water sector

There is a growing body of literature on the importance of proximity for innovation and other knowledge-related outcomes. We examine the impact of geographical, social, organisational, and cognitive proximity for a heterogeneous population, including people from academia, knowledge institutes, industry, and government. We analyse data on 1020 ego–alter relationships, derived from a survey among water professionals in the Netherlands. The use of survey data allows for more refined indicators of proximity and more diverse collaboration outcomes than those common in the literature. Social and cognitive proximity have a positive effect for all outcomes examined. Geographical and organisational proximity have a negative effect on hard (tangible) outcomes yet a weak positive (if any) effect on soft (intangible) outcomes. We do not find evidence for the suggestions in the conceptual literature that proximity follows an inverted U-curve where most outcomes are achieved in relations with some but not too much proximity.     

What are the ethics of welfare economics? And,are welfare economists utilitarians?

Four questions: (1) What is welfare economics? (2) Is it an ethical system?  (3) How do welfare economists differ from one another? And (4), how do they differ from other economic ethicists? Then utilitarianism is discussed. I was taught, and have inferred to others, that welfare economists are utilitarians. They are not. Welfare economics is an atypical form of welfare consequentialism: consequentialist in that whether an act or policy is right or wrong is a function of only its consequences—the adjective “welfare” because the only consequences that matter are the welfare (well-faring) consequences. Most welfare consequentialists are neither welfare economists nor utilitarians. And, most moral philosophers are not welfare consequentialists—neither are most normal folk.     

Would it have paid to be in the eurozone?

Giving up an independent monetary policy and a flexible exchange rate are the key aspects of joining a monetary union. In this paper we analyse how joining the euro area would have affected the Polish business cycle during the recent financial crisis. To this end we construct a small open economy DSGE model and estimate it for Poland and the euro area. Then we run a counterfactual simulation, assuming Poland's euro area accession in 1q2007. The results are striking — volatilities of GDP and inflation increase substantially. In particular, had Poland adopted the euro, GDP growth would have oscillated between − 6% and + 9% (− 9% to + 11% under more extreme assumptions) instead of between 1% and 7%. We conclude that during the analysed period independent monetary policy and, in particular, the flexible exchange rate played an important stabilizing role for the Polish economy.     

What Determines the Decision to Implement EMAS? A European Firm Level Study

Empirical research on the characteristics of environmentally responsive companies has focussed on US and Japanese companies. For Europe, which is commonly considered as the greenest of the three major markets, similar research is lacking. This paper seeks to fill this gap by empirically investigating business and financial characteristics, stakeholder pressures and public policies to distinguish companies that have implemented the European Eco-Management and Audit System (EMAS) from a unique firm-level dataset of European publicly quoted companies. We find that the EMAS participation decision is positively influenced by the solvency ratio, the share of non-current liabilities, the average labour cost and the absolute company size as well as the relative size of a company compared to its sector average. The profit margin exerts a negative influence. We further find that companies whose headquarters is located in a country that actively encourages EMAS have a higher probability of participation. Finally, this paper suggests that rather than attracting other kinds of companies, a favourable institutional context succeeds in convincing more of the same kind of companies to participate. The authors thank anonymous referees for providing helpful comments and suggestions on earlier drafts of this paper.     

Why do rich countries prefer free trade over free migration? The role of the modern welfare state

"According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers."     

Is the European integration speeding up the economic convergence process of the Central and South-Eastern European countries? A shock perspective

In the current context of continuous reassessment of the sustainability of the single currency and gradual enlargement of the euro area during the last decade, the objective of this research is to obtain new insights into the factors that determine the synchronisation of shocks in the Central and South-Eastern European countries vis-à-vis the euro area. The research contributes to the previous work by making a novel use of error correction model in a dynamic panel context which is extended by adding several important omitted variables related to the trade structure and policy coordination. We find that an increase in trade intensity, intra-industry trade and financial integration leads to less frequent asymmetric shocks. On the other hand, divergent fiscal policies are estimated in some model specifications to increase the shock divergence process, although the estimated impact is rather small to counteract the positive effects associated with trade and financial integration. The identified relationships in this research are affected by the significant trade and growth slowdown in the crisis period; while the global economic turmoil has boosted a demand shock convergence, its impact on the supply shocks is in the opposite (diverging) direction.     

Is the leverage of European banks procyclical?

Detecting whether banks’ leverage is indeed procyclical is relevant to support the view that booms and crises may be reinforced by some sort of supply side financial accelerator, whilst finding a plausible explanation of banks’ behaviour is crucial to trace the road for a sensible reform of financial regulation and managers’ incentives. By analyzing a large sample of European banks, we show that procyclical leverage appears to be well entrenched in the behaviour of those banks for which investment banking prevails over the traditional commercial banking activity.     

The Rise of Populist Movements in Europe: A Response to European Ordoliberalism?

This article aims to explain the contemporary emergence of populism in the European Union. According to Polanyi’s double movement framework, the emergence of these political forces can be understood as the result of protective responses from societies weakened by difficult market adjustments. Since the Single Act treaty (1986), the European economy took a path that intended to create a supranational self-adjusting markets economy based on the ordoliberal philosophy. However, by detaching the economic sphere from the reach of politics, the European Single Market has injured some important social institutions. The rise and the diversity of populisms in the European Union can therefore be explained by an attempt to preserve some national institutions that were diversely impacted by the market forces.