The origin and insignificance of labour market imperfections in the Netherlands: Another note on the specification of the UV curve 1955–1980

Summary This paper reestimates the UV curve for the Netherlands 1955-1980 and challenges the conclusions based on previous specifications of the curve. The specification finally chosen solves not only the technical problems of autocorrelation and the like, but also yields insight into the origins of the upward shift of the UV curve. The majority of the factors responsible for the rise in unemployment due to labour market imperfections bears a clearly cyclical character. The qualification of this type of unemployment as structural seems therefore incorrect and misleads policy intentions towards inefficient micro-economic labour market policy.I acknowledge the stimulating comments in the critical remarks of S. Kuipers, Th. van de Klundert and J. Muysken and the statistical assistance of Karl Driessen. The very start of this project was made possible with the financial assistance of the National Program for Labour Market Research (NPAO-ZWO No. 45–39).     

Labour Market Trends and Structures in ASEAN and the East Asian NIEs

The paper reviews the literature on labour markets in the region with special emphasis on the impact of economic growth and structural change on employment and wages. It deals with labour supply trends, employment creation outside agriculture (especially export orientated industrialization and new high-tech industries), labour absorption in agriculture, wage differentials and the functioning of rural and urban labour markets.
The creation of efficient and equitable labour market institutions and labour market flexibility have emerged as dominant issues in the NIEs. In the ASEAN-4, because of concentration of employment in low productivity and low wage jobs and underutilization of labour, the rate of modern sector labour absorption remains the major policy concern.     

Groeizaam financieel beleid

Summary Economic growth, and the level of savings required to finance it, have increased in the Netherlands since the second world war to a considerably larger extent than could reasonably have been expected. The Netherlands are among the countries which, after the period of recovery and economic revival, have become under the spell of the idea of economic growth. The country was able to realize this growth by using an amount in the order of magnitude of 20 per cent. of its national income (calculated at market prices) for the formation of capital.This percentage was attained thanks to the fact that savings of private individuals were largely supplemented by government savings, by business savings (effectuated through keeping appreciable portions of net profits in the business for the purpose of strengthening reserves), and by forming (or enlarging the amount of) funds, set aside for carrying out arrangements made for the payment of old age pensions, widows' pensions and the like. More than half of the above-mentioned total of 20 per cent. was due to savings of these three kinds. As such savings are often not felt by private individuals as sacrifices, they may be called disguised or veiled savings.The author pays special attention to government savings. They have been a permanent feature in the Netherlands since the end of the war; and they have contributed to no small extent towards financing economic growth. They emanated from surplusses of current central government income above current central government expenditure, and enabled the central government to finance important investments, also for the account of local authorities.For the year 1960 a savings quota of 23 per cent. of the national income was registered. Since then the percentage has gone back to 17 1/4 per cent. in 1963. In the meantime impulses towards economic growth have gained strength. With a view to this development the government recommends serious endeavours directed to re-establishing a savings quota of 23 per cent. of the national income. Given the strong tendency towards increased consumptive spending which has made itself felt during the last few years, the author realizes that this is a desideratum, by no means easy to be fulfilled. He does not, however, consider its fulfilment as a task which cannot be accomplished.Rede, uitgesproken bij de aanvaarding van het ambt van gewoon hoogleraar in de leer der openbare financiën aan de Rijksuniversiteit te Leiden op 2 december 1966.     

Impact of employment protection legislation on employment and exporting in select African countries

Labour market flexibility is an important issue in both development and labour economics. More flexibility in the labour market is believed to facilitate job creation, but also makes it easy for employers to terminate employment contracts and may be in conflict with the notion of decent jobs as promoted by the International Labour Organization and workers' unions. It is therefore not surprising that labour market flexibility or inflexibility has received a lot of attention in the extant literature. Using a sample of about 4700 firms from six African countries, we investigate the impact of restrictive labour regulation on a number of economic outcomes and find that more restrictive labour market regulations are detrimental to export propensity, export intensity, investment and employment. Policy-makers must be cautious, however, when implementing employment regulations as too flexible regulations may benefit employers at the expense of employees.     

Utilising a Demand-led Approach in a Local Labour Market

Traditional labour market activation policies have tended to be focused on labour supply and improving the opportunities for new entrants or re-entrants to obtain appropriate paid employment. This emphasis was encouraged in the 1980s and 1990s by shifts in the location and nature of employment (deindustrialisation), growing and persistent levels of unemployment and policy concerns with labour market disadvantage. More recently, the need to ensure international competitiveness, often by minimising local labour costs and enhancing labour flexibility, has been accompanied by a concern amongst employers at the impact of skill shortages. One response has been to shift the policy focus from supply to demand, essentially by seeking to understand the changing nature of local labour demand and by developing appropriate labour market initiatives. This paper analyses the case study provided by a labour market initiative in a regional labour market in New Zealand to assess the utility of such an approach. The Waitakere Employment and Skills Project (WESP) is a collaborative approach to labour demand, involving a number of economic development and local/national government agencies, as well as a university research team (including the author).     

Een Actief Arbeidsmarktbeleid

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Active labour market policy in The Netherlands

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Referaat gehouden voor de jaarlijkse bijeenkomst van de Vereniging van Afgestudeerden der N.E.H. te Rotterdam, op 17 Mei 1967.     

Unemployment on account of market imperfection in the Netherlands since the second world war

Summary By means ofUV analysis it has been attempted to gain some insight into the development of unemployment on account of market imperfection in the Netherlands between 1956 and 1975. Three conclusions can be drawn. (i) The imperfection of the labour market has increased not inconsiderably between 1956 and 1975. (ii) Since the beginning of the Seventies structural unemployment has been caused both by the qualitative discrepancies between supply and demand and by a quantitative shortage of jobs. (iii) The increase in market imperfection must be ascribed above all to the steadily growing imperfection of the sections of the labour market corresponding to the occupational groups.[/p]Professor of Economics and Graduate Assistant, Universtiy of Groningen, The Netherlands.The authors would like to thank Professor Th. van de Klundert and their colleagues of the Department of Economics for their valuable comments on the first version of this article.     

Unemployment and Economic Policy in Denmark in the 1930s

Abstract

The paper examines Danish unemployment and the employment policy in the 1930s. The unemployment data indicate that though the unemployment increased dramatically the rate of unemployment remained low. The official Danish unemployment records definitely underestimated the actual unemployment in the early 1930s, but the discrepancy was hardly as big as some scholars have suggested. The paper furthermore points out that the rather atypical rise in the Danish unemployment from the mid-1930s can be attributed to a rise in the natural rate of unemployment due to an improved unemployment insurance coverage and a more comprehensive registration of the unemployment. The second part of the paper deals with the Danish employment policy. Unemployment remained high on the political agenda, but the employment problem never became the main target for the economic policy. An active employment policy was constrained by the problems of the balance of payments and the political disagreements in parliament. While the macroeconomic policy did help to stabilize the economy and the employment, the number of measures directly targeting the labour market was small, and they seldom gave rise to much job creation.     

Investments,wages, prices and demand for labour

Summary Since 1971 the employment in the Netherlands has continuously decreased. Apart from the decrease caused by the recent depression, particularly in the year 1975, the decrease is a more pronounced continuation of a tendency which is manifest already in a number of years before. In this paper an attempt is made to explain the structural development of employment by means of a clay-clay vintage model. It appears that the unfavourable development of employment is connected with the accelerated growth of real labour costs in the past decade.This article is a translation of a revised and somewhat extended version of a paper published earlier in Dutch: H. den Hartog and H. S. Tjan,Investeringen, lonen, prijzen en arbeidsplaatsen, Central Planning Bureau, Occasional Paper, 1974/2, The Hague, 1974. This revised version of the clay-clay vintage model was introduced into a much more complete model of the economy of the Netherlands in: H. den Hartog, Th. C. M. J. van de Klundert and H. S. Tjan, De structurele ontwikkeling van de werkgelegenheid in macro-economisch perspectief, inWerkloosheid, Preadviezen van de Vereniging voor de Staathuishoudkunde, The Hague, 1975.     

A model of the Dutch labour market (AMO-K)

Summary So far, the labour market has not received any special attention from macro-econometric model builders. In this article an attempt has been made to describe the labour market in detail, paying attention to such important phenomena as the friction between labour supply and demand, the heterogeneity of labour, the dependence of labour supply on the labour-market situation, the Phillips mechanism and the impact of real wages on labour demand. To make it suitable for policy simulations, the model has been extended to a complete macro-econometric model, taking account of the fact that both labour and capital limit the production possibilities.This paper summarises an extensive Dutch report on the construction of a model for the Netherlands labour market. The title of the original report is AMO-K: Een arbeidsmarktmodel met twee categorieën arbeid; (AMO-K, A labour-market model with two categories of labour) ; it was published by the Netherlands Economic Institute (NEI) in Rotterdam in the so-called Olive Series, 1982-2, pp. 403ff. Some details of the model presented in that report were changed after its publication; see G. den Broeder, AMO-K 81-12, Tussenrapport betreffende de verdere ontwikkeling van het arbeidsmarktmodel (Interim report on the further development of the labourmarket model), Rotterdam, September 1983. Since then, only minor changes have been carried through. The model reproduced in this paper is the modified version. The model was developed within the National Programme of Labour-Market Research (NPAO) (now defunct), the NPAO organisation having granted a commission to the NEI in Rotterdam.     

Herverdelingspolitiek van hoofdzaak naar bijzaak?

Summary A more equitable personal distribution cannot be achieved exclusively by a general incomes policy which changes primary distribution only. In that case people that have left the labour force are beyond the scope of incomes policy because their incomes often consist of transfers. Neither can redistribution instruments be considered as pseudo-policies for these groups. An effective incomes policy will therefore have not only to bring about fundamental changes in the conditions of supply and demand on the factor markets, but to make use of transfers as well.

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Rede, uitgesproken bij de aanvaarding van het ambt van gewoon hoogleraar in de staathuishoudkunde aan de Nederlandse Economische Hogeschool te Rotterdam op 20 april 1972.     

Education and the labour market in Botswana

Using primary data from a 1993/4 Household Income and Expenditure Survey in Botswana, this article presents empirical results on occupational attainment, its determinants, and the extent of filtering down in Botswana's labour market, given changes in labour market conditions over time. It was found that the Botswana labour market has been characterised by some ‘filtering down’ of educated workers into less skilled jobs as the supply of skilled manpower exceeded demand. Those who entered the labour market earlier, those with more education, those located in the urban areas and male workers are more likely to occupy jobs that are higher up in the hierarchy than to be in an unskilled blue-collar job. Jobs higher up in the hierarchy are also more rewarding financially. The article shows that there is occupational segregation of workers by gender in Botswana's labour market in that female workers are generally confined to a narrow range of occupations. The policy implications are that employment creation has to be pursued vigorously and the issue of gender discrimination investigated further.     

Over inkomenspolitiek

Summary Incomes policy is defined as that part of government activities which is directly and wittingly engaged in the formation and the distribution of incomes. The results of such a policy are limited by market forces, but it is surely possible for the government to influence the distribution of earning capacities, the market system and the formation of incomes.The aims of incomes policy are twofold. Firstly, to achieve economic equilibrium,i.e., full employment, internal and external monetary equilibrium. Secondly, a more reasonable income distribution, which may be translated as: more equality on the condition that the national product (productive strains and savings) is not reduced too severely.Because other instruments are insufficient, incomes policy is indispensable to restrict inflationary pressures. If a more equal distribution is thought to be desirable, too, this kind of policy is necessary, because in peacetime automatic distributive changes are only very small.Incomes policy may be devided into three parts. Firstly (and most radically), the redistribution of earning factors and capacities, especially capital, market power and education. Secondly, measures with respect to factor payments, of which wages policy is an important part. Guidelines have proved not to be sufficient. Thirdly, income transfers, a typically welfare-state instrument of only limited importance.On these subjects a number of rather detailed proposals are made. It is stressed, however, that the definite choice of measures and priorities is a political one.Openbare les uitgesproken ter gelegenheid van de aanvaarding van ambt van lector in de economic aan de Rijksuniversiteit to Groningen op dinsdag 19 maart 1968.     

Rural labour markets: the welsh example

This paper examines the rural labour market within Wales over the last decade. Data from the Labour Force Survey and the New Earnings Survey are used to compare trends in economic activity rates, employment, education and earnings in rural Wales with the rest of the country. In addition to the rural-urban comparison, evidence presented from other rural labour market studies is used to establish similarities between the rural labour market within Wales and the rest of the UK. In this respect, the paper collects evidence from which the need for differential labour market policy between the rural and urban area can be assessed.     

A Flexicurity Labour Market in the Great Recession: The Case of Denmark

Flexicurity labour markets are characterised by flexible hiring/firing rules, a generous social safety net, and active labour market policies. How can such labour markets cope with the consequences of the Great Recession? This paper takes a closer look at this question considering the case of Denmark. It is found that employment adjustment is not particularly large in international comparison, but a larger burden of adjustment is along the extensive (number of employees) rather than the intensive (hours) margin. The level of job creation is high, and remains so despite the crisis, although job creation is pro-cyclical and job-separation counter-cyclical. As a consequence most unemployment spells remain short. Comparative evidence does not suggest that flexicurity markets are more prone to persistence. Crucial for this is the design of the social safety net and in particular the active labour market policy. However, it is a challenge to maintain the efficiency of the activation system in a period with high unemployment.     

Setting It Right: Employment Protection,Labour Reallocation and Productivity

This paper provides a critical review of the recent empirical evidence on the links between regulations affecting the hiring and firing of workers, labour reallocation and productivity growth. It also reviews how workers affected by labour mobility fare and discusses policy options to support them. The upshot is that stringent employment protection has a sizeable negative effect on labour market flows and, through this channel, hinders productivity growth. At the same time, the evidence also shows that while greater labour market reallocation benefits many workers through higher real wages and better careers, some displaced workers lose out via longer unemployment durations and/or lower real wages in post-displacement jobs. In this context, reforms of employment protection should be considered as part of a comprehensive package that also includes an adequate safety net for the unemployed and effective re-employment services.     

The community programme revisited

This paper examines the lessons for the New Deal era of some older strands in UK and European labour market measures; the Community Programme of the 1980s and the experience of “entreprises d'insertion in France, Spain and the Netherlands. It considers whether the institutional infrastructure of the New Deal is appropriate for the realisation of “intermediate labour markets”. This raises some further questions; whether ILMs are about creating employment or merely redistributing it, and whether it would be preferable to use the “benefit transfer principle” to produce social wealth without regard for commercial viability.     

Over het macro-economische beleid voor de middellange termijn

Summary In the Netherlands there has been laid much emphasis on the goal of economic growth in recent years. There seems to be a tendency to exaggerate the benefits somewhat and to pay less attention to the costs of growth. In the context of medium term planning there is not much sense in aiming at a maximum growth rate; on the basis of detailed information the medium term plan should aim at a careful balance between several desiderata.In this connection the distribution of domestic expenditure between private consumption, private investment and public spending is of great importance. As the national rate of return on investment seems not to be exceptionally favourable, perhaps a case can be made for putting less emphasis on the expansion of privateinvestment, which is already high in this country. In any case there can be reason to formulate targets for the relative growth of the different spending categories in the medium run. In this line of thought budgetary and monetary policies should be specifically designed for the realization of these targets. This seems to be a more satisfactory approach than the existing methods in the field of macro-economic policy, which rely to a large extent on rules of thumb.Rede, uitgesproken bij de aanvaarding van het ambt van gewoon hoogleraar in de Staathuishoudkunde aan de Nederlandse Economische Hogeschool Hogeschool voor Maatschappijwetenschappen to Rotterdam op 2 november 1967. De uitgesproken tekst is op een aantal plaatsen gewijzigd of aangevuld.     

Balancing Work and Family Life during the Life Course

This paper discusses how work and family obligations can be better reconciled in EU countries by adopting a life-course perspective. It stresses that longer and deeper involvement in paid employment allows people to exploit their longer life to reconcile the two ambitions of, first, investing in the next generation as a parent and, second, pursuing a fulfilling career in paid work. Greater flexibility of working time over the life course requires more individual responsibility for financing leave. Moreover, rather than shielding older insiders through employment protection, labor-market institutions should enable parents of young children to easily enter and remain in the labor market. Finally, more activating social assistance and in-work benefits should replace passive income support for breadwinners. This paper is a revised draft of a paper prepared for high-level expert conference on the Social Policy Agenda for the European Union on October 28/29 in Amsterdam, the Netherlands. The author thanks Evert Jan van Asselt, Peter Cuyvers, Henk Don, Bas Jacobs, Ruud de Mooij, Wouter Roorda, Martijn de Wildt and two anonymous referees for helpful comments on earlier drafts, and Peter Cuyvers, Laura Thissen, and Wouter Roorda for research assistance.     

Labour hoarding in Dutch manufacturing industry

Summary Comfronting strong output fluctuations, companies are in no position to adjust their labour volume instantly to the technically efficient level. Because of that, they may find themselves with an internal labour reserve at one moment, and be short of labour at another. This phenomenon is called labour hoarding. In this article we propose a new method for the measurement of labour hoarding and apply it to the Dutch manufacturing industry. The results suggest that in the period 1972 to 1982, labour surpluses in that sector varied between five and fifteen percent of employment. Labour shortages appear to have been minor in the same period. Output uncertainty and real wage costs are supposed to be the main causes of the discrepancy between actual and technically efficient employment. Under this assumption an employment function is derived and fitted. The results are in accordance with the theoretical model on which the employment function was based.The author is attached to the Netherlands Economic Institute, Rotterdam.Based on the author's dissertation,Omvang en oorzaken van labour hoarding, Rotterdam, 1987.