The sensitivity of poverty rates to macro-level changes in the European Union

The authors use the European Union-wide tax–benefit model,EUROMOD, to establish baseline rates of relative poverty in1998 for each of the Member States and then explore their sensitivityto (a) an increase in unemployment, (b) real income growth and(c) an increase in earnings inequality. They find that povertyrates are sensitive to such ‘macro-level’ changesbut that the size—and in some cases the direction—ofthe effect varies across countries. If such indicators are tobe used in judging the effectiveness of social policies, itis important that differences in responsiveness are fully understood.     

Reciprocity—an indirect evolutionary analysis

This paper investigates agents who face a stylized pecuniary ‘game of life’ comprising the ultimatum game and the dictator game. Utility may but need not be attached to equity and reciprocity, as formalized by Falk and Fischbacher (Games Econom Behav, 54(2): 293–315, 2006) but, critically, this social component of preferences cannot be conditioned on whether an ultimatum or a dictator game is played. Evolutionary fitness of agents is determined solely by material success. Under these conditions, a strong preference for reciprocity, but little interest in equity as such evolves. Possible exogenous constraints that link reciprocity and equity concerns imply long-run levels of both which depend on the relative frequency of ultimatum vs. dictator interaction in agents’ multi-game environment. Financial support from the German Academic Exchange Service (DAAD) is gratefully acknowledged.     

The Impact of the Welfare State and Social Policy on the Working Population: The Recent British Experience

This paper focuses on financing the welfare state expenditures in the UK. It offers a comprehensive analysis of social expenditures and taxes paid by the working population families, and an estimation of the net benefits received by them. While the subsequent analysis of the welfare state and its development primarily concentrates on the British experience, it has a broader application to other OECD countries. The UK as the most egalitarian “liberal market economy,” offers an interesting case for the study of the interaction between the welfare state expansion and economic growth. In terms of her capitalist economic structure, (interaction between market and economy) she is relatively closer to the USA and other Angelo-Saxon (liberal market) economies. In terms of her level of social expenditures, she is much closer to the European “social market economies” than the USA and other more egalitarian “liberal market economies.”     

Labour market deregulation, 'flexibility' and innovation

Labour ‘flexibility’ is often portrayed as importantto competitive success. Using evidence from an original surveyof UK firms, this paper investigates the relationships betweenfirms' use of, on the one hand, various flexible work practices,human resource management techniques, and industrial relationssystems and, on the other hand, the innovative activities ofthose firms. Our results suggest that the sort of ‘lowroad’ labour flexibility practices encouraged by labourmarket deregulation—short-term and temporary contracts,a lack of employer commitment to job security, low levels oftraining, and so on—are negatively correlated with innovation.     

Hans Singer's model of the severity of recessions

This paper draws attention to the innovative but neglected workof Hans Singer on the dynamics of unemployment. Influenced byKeynes, in the late 1930s Singer enquired into the relationshipbetween the inflow into unemployment—resulting primarilyfrom (involuntary) separations from employment—and thesize of the resultant fluctuations in the level of unemployment.His focus was on the determinants of the severity—measuredin terms of how far unemployment rises—of recessions.We illustrate his approach by looking at quarterly data forthe claimant count and its associated inflow and outflow inthe UK over the period 1989–2003, a period which includesone major recession episode. In addition to drawing attentionto Singer's ideas, the paper also extends his model by takinginto account recent empirical evidence on the behaviour of oneof the key variables in his model. We argue that, with thisextension, Singer's elegant and parsimonious model of unemploymentdynamics is a useful complement to Keynes's ideas on the fluctuationsin aggregate demand and output, and is of contemporary relevance.