Evaluating the Connection between Social Protection and Economic Flexib Ility

42 Pages Posted: 28 Aug 2007 Last revised: 10 May 2021

See all articles by Rebecca M. Blank

Rebecca M. Blank

U.S. Department of Commerce

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: April 1993

Abstract

Over the last 10 years, a variety of analysts have blamed high unemployment and stagnant economic growth in Europe on inflexible labor markets and pointed to the US as a more flexible economy, due to its less regulated labor markets and less generous social protection programs. This paper reviews that debate, critiques the arguments about the relationship between social protection programs and labor market adjustment, and reviews the research literature on this topic. In general, we conclude that much less is known about the aggregate effects of social protection programs on the economy than is generally claimed. Within the very limited existing research, there is little evidence of a significant trade-off between social programs and labor market adjustment, although there is also not much evidence to support those who claim that social protection promotes economic growth. The paper ends by suggesting future research directions.

Suggested Citation

Blank, Rebecca M. and Freeman, Richard B., Evaluating the Connection between Social Protection and Economic Flexib Ility (April 1993). NBER Working Paper No. w4338, Available at SSRN: https://ssrn.com/abstract=478738

Rebecca M. Blank (Contact Author)

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Richard B. Freeman

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