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Full Employment as a Worker-Discipline Device

Karl Ove Moene and Michael Wallerstein
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Michael Wallerstein: Northwestern University

Chapter 3 in Property Relations, Incentives and Welfare, 1997, pp 69-93 from Palgrave Macmillan

Abstract: Abstract Social democracy in post-war Europe has been dedicated to the proposition that it is possible to obtain the socialist virtues of equality and security without losing the capitalist virtue of economic efficiency. The trouble with capitalism, from the social democratic perspective, is that the market alone fails to provide either a just distribution of rewards or adequate insurance against life’s risks, including the risks of ill health, inadequate retirement income and unemployment. In Norway and Sweden the post-war social democratic regimes emphasized three interlocking policy commitments. First, wage differentials were to be reduced through centralized, solidarity-type bargaining that pushed up the wages of the low-paid workers while restraining the wage increases of highly-paid workers. Second, security for all was to be provided by welfare policies that supplied basic goods — defined as including pensions, decent housing, education and health care — on a relatively universal basis. Third, full employment was to be guaranteed by a combination of macroeconomic and labour policies.

Keywords: Full Employment; Wage Premium; Matching Function; Unemployed Worker; Social Democracy (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-25287-9_3

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DOI: 10.1007/978-1-349-25287-9_3

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