Employment Promotion

Social scientists and policymakers traditionally have viewed the welfare state as a means of achieving economic security, equality of opportunity, and redistribution. In the past three decades, an additional goal has become prominent: employment. Policy has more and more aimed to increase paid work. The turn towards employment promotion has a number of causes: funding the welfare state, fairness, poverty reduction, social inclusion and subjective well-being, women’s independence and fulfilment, and external encouragement by the OECD and other institutions. Policy tools include benefit conditionality, assistance with job search and placement, assistance with transportation, employment-conditional earnings subsidies, employer subsidies, public employment, promotion of part-time work and flexible work schedules, tax incentives for second earners, adjustment of wage levels and wage inequality, reduction of non-wage labour costs, moderation of employment protection regulations, family-friendly policies, support for human capital, and career ladders. Has employment promotion succeeded? Since 1990, the overall employment rate, the rate for women of prime working age, and the rate for fifty-five-to-sixty-four-year-olds have increased in most of the rich democratic nations, and in some instances the rise has been quite large. These countries’ experience over the past several decades suggests there is little, if any, trade-off between low inequality and high employment.