The Political Economy of the Symbiosis between Labour Market Regulation and the Social Welfare System

Peter Swan and Mikhail S. Bernstam
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Mikhail S. Bernstam: Hoover Institute, Stanford University.

Australian Journal of Management, 1988, vol. 13, issue 2, 177-201

Abstract: Labour market regulation and social welfare policies live in a symbiotic relationship. The growing social welfare safety net has made acceptable, at least for a time, the centralised system of wage fixation in Australia which appears to have contributed to a high level of unemployment. By subsidising those denied access to the labour market due to minimum wages, the social welfare system puts a politically acceptable face on otherwise unsustainable policies. The cost is not confined to groups receiving benefits. The higher taxation levels needed to sustain the social welfare system have depressed the after-tax earnings of those workers remaining in employment to the point where wage restraint in exchange for increased numbers of jobs and lower taxes becomes worthwhile.

Keywords: LABOUR; REGULATION; SOCIAL WELFARE; SINGLE MOTHERS; UNEMPLOYMENT (search for similar items in EconPapers)
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:13:y:1988:i:2:p:177-201

DOI: 10.1177/031289628801300204

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