The analysis provides a new explanation for two widespread problems concerning European unemployment policy: the disappointingly small effect of many past reform measures on unemployment, and the political difficulties in implementing more extensive reform programs. We argue that the heart of these problems may be the failure of many European governments to implement broad-based reform strategies. Our analysis suggests that major unemployment policies are characterised by economic complementarities (in the sense that the effectiveness of one policy depends on the implementation of other policies) and political complementarities (in that the ability to gain political consent for one policy depends on the acceptance of other policies). Under these circumstances, incremental, small-scale adjustments of existing policy packages are doomed to failure. Our analysis suggests instead that the European unemployment problem should be tackled through "broadʺ reforms that exploit the salient economic and political complementarities among individual policy measures.
The analysis provides a new explanation for two widespread problems concerning European unemployment policy: the disappointingly small effect of many past reform measures on unemployment, and the political difficulties in implementing more extensive reform programs. We argue that the heart of these problems may be the failure of many European governments to implement broad-based reform strategies. Our analysis suggests that major unemployment policies are characterised by economic complementarities (in the sense that the effectiveness of one policy depends on the implementation of other policies) and political complementarities (in that the ability to gain political consent for one policy depends on the acceptance of other policies). Under these circumstances, incremental, small-scale adjustments of existing policy packages are doomed to failure. Our analysis suggests instead that the European unemployment problem should be tackled through ?broad? reforms that exploit the salient economic and political complementarities among individual policy measures.
The analysis provides a new explanation for two widespread problems concerning European unemployment policy: the disappointingly small effect of many past reform measures on unemployment, and the political difficulties in implementing more extensive reform programs. We argue that the heart of these problems may be the failure of many European governments to implement broad-based reform strategies. Our analysis suggests that major unemployment policies are characterised by economic complementarities (in the sense that the effectiveness of one policy depends on the implementation of other policies) and political complementarities (in that the ability to gain political consent for one policy depends on the acceptance of other policies). Under these circumstances, incremental, small-scale adjustments of existing policy packages are doomed to failure. Our analysis suggests instead that the European unemployment problem should be tackled through "broad" reforms that exploit the salient economic and political complementarities among individual policy measures.
This paper analyses how and to which degree the Danish flexicurity concept and its various elements achieve the renowned Danish miracle by evaluating their unemployment and inequality effects and their complementarities. We develop a microfounded model of searching workers and firms, calibrate it to Germany and perform the policy experiment of implementing the full Danish flexicurity set of policies (low employment protection, high unemployment benefits and workfare). Our results show that implementing the Danish flexicurity concept in Germany would reduce unemployment and earnings inequality substantially. Furthermore our analysis illustrates that the Danish flexicurity policies have some apparent complementarities in Germany - the reduction of unemployment effect is nearly 40% greater when the policies are implemented in conjunction than in isolation.
The development of the principle of complementarity by a well-known Danish physical scientist N. Bohr was the outstanding achievement of philosophical idea, having prime value to explain quantum mechanics phenomena and biological and social (including economic) phenomena sufficiently differing from them. This principle focuses the attention of the researchers on revelation of dualistic, dialectically contradictory essence of the phenomenon studied. Such task cannot be solved using some single category whatever significant and universal it is. Three categories shall be used for this. One for designation of a basic phenomenon per se, two others to describe additional properties, revealing dualistic, dialectically contradictory essence of the phenomenon studied. Such approach allows developing the required theoretic and methodological tools to study dualistic, contradictory nature of economic phenomena and processes as a two-pole model of the economic phenomenon (ABC model), embodying the principle of complementarity in political economy. This model may be used as a tool for critical analysis of conceptual framework of economics and development of scientific novelty. The article shows that theoretic interpretation of many economic phenomena has stood the test from ABC model position, some of them could not overcome such a test. These are, for example: nominal salary, labour productivity, marketing and advertising. Analysis using ABC model revealed that their widespread theoretical interpretations ignore the essential characteristics of these phenomena. The principle of complementarity which fixed inherent dualistic dialectically contradictory structure as the required step of cognition of nature and society phenomena essence plays the most important methodological role in the analysis of economic phenomena. ; peer-reviewed
In: Bhargava, V. R, & Young, C. (2021). The Ethics of Employment-at-Will: An Institutional Complementarities Approach. Business Ethics Quarterly, 1-27. doi:10.1017/beq.2021.40
Using aggregate analysis, this paper examines the core contentions of the "varieties of capitalism" perspective on comparative capitalism. We construct a coordination index to assess whether the institutional features of liberal and coordinated market economies conform to the predictions of the theory. We test the contention that institutional complementarities occur across sub-spheres of the macroeconomy by examining the correspondence of institutions across sub-spheres and estimating the impact of complementarities in labor relations and corporate governance on rates of growth. To assess the stability of the institutional features central to the theory, we assess the dynamics of institutional change in recent years. The evidence suggests that there are powerful interaction effects among institutions across sub-spheres of the political economy that must be considered if the economic impact of institutional change in any one sphere is to be accurately assessed. ; Mit Hilfe von Aggregatdaten analysiert dieses Papier Kernaussagen des "Varieties-of-Capitalism"-Ansatzes. Um beurteilen zu können, ob die Aussagen der Theorie mit den institutionellen Begebenheiten liberaler und koordinierter Ökonomien übereinstimmen, konstruieren wir einen ländervergleichenden Index der ökonomischen Koordination. Wir überprüfen die These von der institutionellen Komplementarität zwischen den verschiedenen Sphären politischer Ökonomien, indem wir das Zusammenwirken von Institutionen analysieren und den Einfluss komplementärer Institutionen der Arbeitsbeziehungen und der Unternehmenskontrolle auf die Höhe von Wachstumsraten untersuchen. Wir diskutieren darüber hinaus, wie stabil die institutionellen Begebenheiten in den vergangenen Jahren waren. Im Ergebnis zeigen sich starke Interaktionseffekte zwischen den Sphären politischer Ökonomien, die berücksichtigt werden müssen, um die wirtschaftlichen Wirkungen institutionellen Wandels in einzelnen Sphären zu verstehen.
AbstractThe concept of institutional complementarity plays an important role in the comparative analysis of capitalism. It has often been criticised for being too static and too functionalist, unable to explain change because it would propose a view of institutional forms fitting perfectly with one another. After having presented the concept and its interest for comparative capitalism, this article argues in favour of its usefulness to explain institutional change. However, in order to be integrated fruitfully into a theory of institutional change, it is necessary to have a political economy definition of complementarity, which should not take institutions as some sort of inputs in a production function, but as socio-political compromises established in historically-specific conditions.
Wir beobachten enorme Einkommens- und Wachstumsunterschiede zwischen den Ländern. Die Neoklassische Wachstumstheorie erklärt dieses empirische Phänomen mit Länderunterschieden in der Akkumulation von Produktionsfaktoren sowie in der Produktivität. Ungeklärt bleibt dabei, warum es reichen Ländern gelingt, in physisches Kapital, Humankapital und neue Technologien zu investieren, armen Ländern hingegen nicht. Diese Dissertation beschäftigt sich mit Institutionen als Quelle von Einkommensunterschieden und grundlegenden Faktor für Wirtschaftswachstum. Die Hauptströmung der relevanten Fachliteratur hat es sich zur Aufgabe gemacht, die ökonomischen Effekte verschiedener Institutionen zu isolieren und ihre relativen Wichtigkeiten zu bestimmen. Ich hinterfrage diese Herangehensweise kritisch und widme mich in meiner Analyse institutionellen Komplementaritäten. Dabei rücke ich in drei aufeinander aufbauenden und komplementären Studien die Abhängigkeit der Wirksamkeit verschiedener Institutionen von einander sowie von Umweltfaktoren und Kontexten in den Vordergrund. Die erste Studie evaluiert räumliche Interdependenzen von Korruptionsniveaus auf einer subnationalen Ebene und zeigt, dass räumliche Ausbreitung sowie räumliche Heterogenität die Varianz und Cluster-Bildung subnationaler Korruptionsniveaus erklären können. Die zweite Studie befasst sich mit den Schwierigkeiten des EU Integrationsprozesses und präsentiert einen theoretischen Rahmen, der erklären kann, warum EU-Länder verschiedene nationale institutionelle Systeme herausbildeten und vereinheitlichte Regelungen unterschiedliche ökonomische Ergebnisse in den Mitgliedsländern erzielen. Die letzte Studie untersucht die Einkommenseffekte von Eigentumsrechts- und Vertragsinstitutionen, indem sie zwischen Individual- und Interaktionseffekten differenziert und die Stärke des Interaktionseffektes von der Passung der Eigentumsrechts- und Vertragsinstitutionen abhängig macht. ; We observe huge and persistent cross-country differences in income levels and growth paths. Growth theory and growth accounting relate differences in income to differences in input factor accumulation and productivity. This approach, however, does not explain why rich countries succeed to invest in physical and human capital and adopt new technologies, while poor countries fail. This thesis aims at explaining this empirical phenomenon and discusses the role of institutions as a fundamental cause of growth. I deviate from the standard practice to identify which institutions matter most for economic outcomes by isolating the effects of different types of institutions and evaluating their relative importance. Instead, I make the opposite assumption and investigate in how far the economic effects of institutions are interdependent and vary in different environments and contexts. The thesis sheds light on the relationships among institutions, institutions and environments, and institutions and income. All of these relationships are endogenous and investigated in three studies in a consecutive and complementary manner. The first study assesses spatial interdependencies among institutions on the example of subnational corruption levels. It shows that spatial spillovers and spatial heterogeneity can explain why subnational corruption levels differ and cluster not only between but also within countries. The second study proposes a theoretical framework that can explain the evolution of a variety of national institutional set-ups and diverging economic effects of the same regulations in different countries on the example of the EU integration process. The third study assesses individual and interaction effects of legal property rights and contracting institutions on income levels and shows that the quality fit of the two different types of legal institutions matters for the direction and size of the interaction effect. ; Katja Kalkschmied ; Zusammenfassungen in Deutsch und Englisch ; Kumulative Dissertation aus 3 Artikeln ; Karl-Franzens-Universität Graz, Dissertation, 2020 ; OeBB ; (VLID)5525028