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Institutions, Innovation and Growth

Selected Economic Papers

Edited by Jean-Philippe Touffut

The first book in this important new series, under the general editorship of Nobel Laureate Robert Solow, Institutions, Innovation and Growth assembles a stellar cast of international contributors. Leading economists join the debate on innovation and economic growth, focussing on a broad spectrum of issues ranging from labour markets to corporate governance. Growth paths within the OECD are also assessed, with particular emphasis on contrasts between US and European models. The book seeks to identify those institutional factors, taking into account different national trajectories, which might serve to promote economic growth in Europe.
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Chapter 3: Activating labour market policy: 'flexicurity' through transitional labout markets

Gunther Schmid


3. Activating labour market policy: ‘flexicurity’ through transitional labour markets Günther Schmid INTRODUCTION In continental Europe, ‘activating labour-market policy’ (ALMP) has become a fashionable slogan to counter the neoliberal ‘workfare’ philosophy. This approach, however, has produced little more than wishful thinking. It only vaguely suggests a ‘third way’ between ‘left’ and ‘right’, between ‘modernists’ and ‘traditionalists’, or between an unfettered new capitalist economy and an old-fashioned (Bismarckian) capitalist welfare state as represented by hardheaded trade unionists, conservative Social Democrats and centrist Christian Democrats. Even the catchier term, ‘flexicurity’, invented by the pragmatic Dutch, remains unclear. The purpose of this chapter is to design a possible institutional framework which gives both ‘activating’ and ‘flexicurity’ a clearer meaning. Our main arguments are as follows. First, many of the results of evaluation studies of ALMP are disappointing because they have not examined implementation failures. Systematic consideration of such failures gives us a better understanding of the meaning of ‘activating’, thereby allowing us to formulate suggestions for improving conventional labour market policy. Second, the lack of directed labour market policy is a further reason for the poor outcomes of many labour market programmes. Analysing such things will suggest ways of directing labour market policy towards transitional labour markets. If we accept the fact that people may wish to move during the course of the life cycle between various kinds of productive activities of which gainful work in the labour market is only one possibility, then labour market policy in Europe has to address...

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