The Welfare State and Jobs

Abstract

The subject area of this paper is very large. The Welfare State has undoubtedly an impact on employment, and for more than a decade now unemployment has increasingly affected the Welfare State. I shill devote more attention to the former aspect by attempting to answer three questions. What is the impact of the Welfare State on employment? What is the nature of the unemployment problem? What are the implications for economic policy? On so varied and so large a problem I am not going to present a model. Instead I will present my thoughts on what appears to be the main issues, with the help of what I know of the existing literature as well as my own work on the role of the State. I will take the conclusions reached as given and I will not attempt here to substantiate them in any detail, adopting an ‘if … then’ approach. I will argue that if one recognises the massive and lasting nature of present unemployment, in Western European countries at least, then a much wider theoretical framework than that afforded by the market clearing representation of economic life is needed. If it is assumed that such a framework holds, then it may have far reaching implications for the requirements of a successful economic policy and for the Welfare State.

I wish to thank Terry Ward for his help with the English.