Achim Kemmerling

New politics in German labour market policy? The implications of the recent Hartz reforms for the German welfare state

The twin predicaments of German labour market performance and welfare state performance triggered an ongoing debate on reforming the German model. Recently, this debate has yielded an outcome in the form of the so-called Hartz laws, a bundle of labour market policies aimed at the reduction of unemployment and the decrease of non-wage labour costs. The Hartz reforms have played a prominent role in the public discussion, but are they really a watershed as both optimists and pessimists claim? In this article we investigate in what sense the Hartz reforms mark a substantive political change and how they are related to similar processes in other countries. To characterise the policy output we discuss three views of policy reform: reform as a process of policy-learning, reform as a process of competitive realignment and reform as a process of reinforcing path dependence. We show which of the three paradigms accounts for which part of the political result. We find evidence for both policy diffusion and retrenchment, but it is too early to speak of a change of regime. Rather, both the changes thus far and the blocked proposals follow a traditional German logic of strong institutional resistance.

Partisan Politics in Regional Redistribution

The current debate on the role of regional politics in the Euro pean Union (EU) is dominated by approaches that focus upon either intergovernmental bargaining or multi-level govern ance. Because Structural Funds are the main EU-wide redis tributive policy, we propose to apply the traditional literature on partisan politics and national redistribution to the case of the EU. We use a new data set on both the distribution of Structural Funds across regions and the distribution of vote shares for different factions of the European Parliament. These data provide empirical details for some of the partisan competition that takes place at the regional level. Specifically, we show that the traditional left vs. right cleavage can have an impact on the size of regional transfers.

Tax mixes, welfare states and employment: tracking diverging vulnerabilities

Contemporaneous welfare states use different mixes of income, payroll and indirect taxes to fund expenditures. The paper investigates how this mix affects the labour market. It briefly discusses the evolution of tax mixes over time and countries before dealing with three claims in more detail. First, countries with high levels of payroll taxation are expected to exhibit a worse aggregate labour market performance than countries relying on income taxation. Second, this finding should hold for low-skilled sectors in particular. Third, since all countries have opened up their goods and capital markets, the impact of taxation on labour market outcomes should have increased over time. These claims are empirically evaluated by a cautious, step-by-step analysis of cross-country and temporal variation in the tax mix for eighteen OECD countries. Whereas the evidence for the first two claims is substantial, evidence on internationalization remains inconclusive. The results help to explain why welfare states show diverging forms of vulnerabilities for employed people.Contemporaneous welfare states use different mixes of income, payroll and indirect taxes to fund expenditures. The paper investigates how this mix affects the labour market. It briefly discusses the evolution of tax mixes over time and countries before dealing with three claims in more detail. First, countries with high levels of payroll taxation are expected to exhibit a worse aggregate labour market performance than countries relying on income taxation. Second, this finding should hold for low-skilled sectors in particular. Third, since all countries have opened up their goods and capital markets, the impact of taxation on labour market outcomes should have increased over time. These claims are empirically evaluated by a cautious, step-by-step analysis of cross-country and temporal variation in the tax mix for eighteen OECD countries. Whereas the evidence for the first two claims is substantial, evidence on internationalization remains inconclusive. The results help to explain why welfare states show di...

Accelerating Downhill: How the EU Shapes Corporate Tax Competition in the Single Market

Tax competition in the European Union is shaped by four partly opposed institutional mechanisms. While market integration and enlargement increase competitive pressure, the tax co-ordination of the Council of Ministers and the tax jurisprudence of the European Court of Justice could potentially reduce it. The net effect is to accelerate tax competition. This article presents quantitative evidence to suggest that tax competition is stronger in the EU than in the rest of the world, and explores qualitatively why tax co-ordination and tax jurisprudence have failed to prevent a race to the bottom in tax rates.

Does Europeanization lead to policy convergence? The role of the Single Market in shaping national tax policies

In this contribution, I review and test the quantitative and qualitative evidence on tax policy convergence for four major fields of taxation in European Union (EU) and Organization for Economic Co-operation and Development (OECD) countries. I interpret the empirical results using major causal mechanisms observed in the literature on international policy convergence. I find that competition and co-ordination alone are insufficient to explain the role of Europeanization of national tax systems. In direct taxation, competition is enhanced by forms of supranational imposition, whereas indirect taxation co-ordination efforts seemed to be enhanced by policy learning.

The Regulation of Redistribution: Managing Conflict in Corporate Tax Competition

Although the EU is not a tax state in itself, European regulations have a considerable impact on national tax policies. This article analyses the role of the EU by a comparison of two forms of corporate tax competition: general competition on rates, and targeted competition in the form of preferential tax regimes. The EU failed to coordinate tax rate competition but managed to curtail ‘harmful’ targeted competition by a combination of soft and hard law. The authors argue that the differing performance of the EU is due to differences in the underlying conflict structures between small and large countries. Whereas both small and large countries are equally affected by targeted competition, small countries are usually winners of general tax competition on rates. By restricting its problem definition to ‘harmful’ targeted competition, the EU was able to make some headway in that area, but this only reshaped rather than impeded overall corporate tax competition.

Diffusion und Interaktion in der Arbeitsmarktpolitik? — Positive und negative Ansteckungseffekte am Beispiel zweier Reformdiskussionen

In der Diskussion uber arbeitsmarktpolitische Reformen fordern nationale Regierungen und internationale Organisationen immer starker das Lernen von anderen Landern. Das politikwissenschaftliche Standardmodell zur Erklarung von Reformen der Arbeitsmarktpolitik ist jedoch zumeist rein vergleichend, ohne Interaktionen zwischen Landern zu berucksichtigen. Dieser Beitrag untersucht, welche Formen, Kanale und Ursachen internationale Diffusion und Interaktion in der Arbeitsmarktpolitik haben konnen. Er wendet sich insbesondere zwei speziellen Reformdebatten in der Arbeitsmarktpolitik zu: der Aktivierung von Arbeitsmarktpolitik sowie der Kurzung individueller Transfers fur Arbeitslose. Empirische Messungen deuten an, dass sich nationale Politiken benachbarter Lander gegenseitig beeinflussen. Dabei handelt es sich weniger um Lerneffekte als vielmehr um Konsequenzen okonomischen Wettbewerbs.

Taxing the Working Poor

In most industrialized countries the tax burden of poor people has increased dramatically over the last few decades. This book analyses both the political origins of this increase and its consequences for the labour market.

When a solution becomes the problem: the causes of policy reversal on early exit from the labour force

Whereas governments had previously designed early exit policies to unburden labour markets, they have come increasingly to regard them as problematic. We investigate the reasons for this policy reversal, focusing on two key actors: governments and trade unions. Our mixed-methods approach entails two major steps: first, we embed approaches to policy reform in a common framework to show the empirical relevance of the two major actors in most OECD countries. We find that both government ideology and union representativeness matter. In a second step, we investigate reform processes in two countries in more detail. Belgium and the Netherlands have much in common as regards government and interest groups but differ in terms of the reversal of early exit policies. We see that both the configuration of electoral and welfare state institutions have shaped the specific strategic environment of the two actors in both countries.

How Labour ended up taxing itself and why it matters: The long-term evolution of politics in German labour taxation

This article argues that the long-term shift in the incidence of taxation from capital to labour has shifted the centre of political conflicts from representatives of capital to those of labour. The fact that most taxation has become an increasing and regressive burden on labour in mature welfare states creates new divides in tax policies among left politicians. To demonstrate this, the article applies the literature on new divides to the case of tax policy. A comparison of German tax policy debates in the late 19th and late 20th centuries reveals that major conflict lines were intra-class, and that over time these lines have shifted from capital to labour. The article concludes that as the origins of new divides are often endogenous to welfare-state politics, the literature on new divides greatly benefits from a historical ‘turn’.