Some social consequences of the financial crisis in europe and comparisons with the us
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Some social consequences of the financial crisis in Europe and comparisons with the US. Etienne Wasmer, Sciences-Po, OFCE, CEPR and IZA. Monday, April 20 at 4pm - Buffett Center Conference Rm , Northwestern University. Initial title/subject. Is America becoming France?

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Some social consequences of the financial crisis in europe and comparisons with the us

Some social consequences of the financial crisis in Europe and comparisons with the US

Etienne Wasmer,

Sciences-Po, OFCE, CEPR and IZA

Monday, April 20 at 4pm - Buffett Center Conference Rm, Northwestern University.


Initial title subject
Initial title/subject and comparisons with the US

  • Is America becoming France?

  • For an economist, social perceptions difficult to apprehend.

    • If no data, no reality?

    • At least, more difficult to « falsify » arguments and theories.

    • How to deal with that?


Dimension 1 lobbying
Dimension 1: lobbying and comparisons with the US


Dimension 2 trust in govt
Dimension 2: trust (in govt.) and comparisons with the US



Outline of the talk
Outline of the talk and comparisons with the US

  • Start with description of the French labor market, political implications.

  • Trust in institutions to deal with it.

  • Structural problems: the adaptability of labor markets and lobbying.


A unemployed b c under employment
A: # unemployed and comparisons with the USB&C: # under-employment


Dual labor market view
Dual labor market view? and comparisons with the US

  • Male 25-49 traditionnally protected, employment rate higher than in the US.

  • Outsiders: lower skill women, youth, minority.

  • Now, the « core » is affected by the recession.


Surge in layoffs
Surge in layoffs! and comparisons with the US



Yesterday
Yesterday employed workers.



America becomes france labor markets converge
America becomes France: labor markets converge! employed workers.

  • What about 2: trust issues?

  • Work by Yann Algan (Sciences-Po) and Pierre Cahuc (Ecole Polytechnique)

    • La société de défiance


« Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people»

WVS 1990, 2000


« No confidence in the justice system ? » be trusted or that you can’t be too careful in dealing with people»


« No confidence in Parliament… » be trusted or that you can’t be too careful in dealing with people»

NB: Harris Poll 2009

9% have « a great deal of confidence » in the Congress


Convergence again
Convergence again? be trusted or that you can’t be too careful in dealing with people»

  • What about confidence in the ability to manage the current situation?


That was in april 2008
That was in April 2008 be trusted or that you can’t be too careful in dealing with people»

In March 2009: Harris poll: 36% have a great deal of confidence in the White House.

  • In this year’s survey the leaders of six institutions enjoy the most confidence:

    The military (58% have a great deal of confidence);

    Small business (48%);

    Major educational institutions (40%);

    The White House (36%);

    Medicine (34%);

    Organized religion (30%);

  • Leaders of the following institution engender the lowest levels of confidence:

    Wall Street (only 4% have a great deal of confidence);

    The Congress (9%);

    Law firms (11%);

    Major Companies (11%);

    The press (12%);


In terms of trust
In terms of trust be trusted or that you can’t be too careful in dealing with people»

  • France-US divide in terms of trust in major institutions.


Last point
Last point be trusted or that you can’t be too careful in dealing with people»

  • Adaptability of the labor market.

    • Based on Wasmer and von Weizsäcker

      • « A Better Globalization Fund », Bruegel Policy Brief, Jan. 2007

        • European new fund to cope with Globalization, adapted from US Trade Adjustment Assistance created by Kennedy Administration in 1960’s.


Idea behind glob fund
Idea behind Glob. Fund be trusted or that you can’t be too careful in dealing with people»

  • Some workers hurt by trade policy of EU

    • Left hand would repair what right hand did

  • Limited funding and activation schemes (mobility, training)

  • Different from original TAA (passive policies, income support)


The costs of job displacement in the eu and the us
The Costs of Job Displacement in the EU and the US be trusted or that you can’t be too careful in dealing with people»

Source: Kletzer (2001), OECD (2005) and authors’ calculations. (*) The re-employment rates are not directly comparable: the US data is based on retrospective questions, while EU data is based on a panel and thus follows more accurately a cohort of displaced workers.


Accumulation of sector job specific skills
Accumulation of sector/job specific skills be trusted or that you can’t be too careful in dealing with people»


Dots sectors
Dots = sectors be trusted or that you can’t be too careful in dealing with people»


Theory
Theory be trusted or that you can’t be too careful in dealing with people»

  • Employment protection and « labor market frictions » raise the incentives to invest in specific skills.

    • In turn: higher demand for employment protection, in order to protect specific skills.

  • Good characterization of EU-US differences

    • Hall, P.A.; Soskice, D. (2001): An Introduction to Varieties of Capitalism. In: Hall, P.A.; Soskice, D. (eds.):

    • Wasmer, E. American Economic Review, June 2006.


Conclusion
Conclusion be trusted or that you can’t be too careful in dealing with people»

  • Is America becoming France?

    • Not yet there!

  • But surely, political tensions.

    • Might resorb in 2010.

    • But implies a likely slow down of structural reforms (if possible!)


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