Should the Government Provide Jobs for Everyone? Societal Expectations and Their Impact on Labour Market Institutions and Outcomes

Abstract

This study explores whether and to what extent voters expect the government to provide jobs for everyone who wants to work. It examines the link between voter expectations and the labour market situation. It finds that the stronger the expectation of the government to provide a job for everyone in the mid-1990s was, the worse the labour market situation is today. Two hypotheses inspired by the theory of public choice are proposed to explain this relationship: (1) societal expectations were not correlated with reforms of labour market institutions in the next two decades; (2) support for the idea of the government providing a job for everyone was significantly lower among the employed (who in many countries constituted the majority of voters) than among other groups, and this difference did not depend on the labour market situation. The empirical analysis is based on a set of 29 indicators of labour market institutions and covers countries included in the Role of Government survey for 1996–2016 — conducted as part of the International Social Survey Programme. The obtained results are largely consistent with the stated hypotheses.