Joan Muysken

Health and endogenous growth

The focus of endogenous growth theory on human capital formation and the physical embodiment of knowledge in people, suggests the integration of the growth supporting character of health production and the growth generating services of human capital accumulation in an endogenous growth framework. We show that a slow down in growth may be explained by a preference for health that is positively influenced by a growing income per head, or by an ageing population. Growth may virtually disappear for countries with high rates of decay of health, low productivity of the health-sector, or high rates of discount.

Deficiencies in education and poor prospects for economic growth in the Gulf countries: The case of the UAE

Abstract Our paper shows that the deficient educational system and the large share of unskilled foreign workers in the Gulf countries are serious impediments to a successful implementation of the strategies of these countries to reduce their dependence on foreign technologies and to restructure their economies in order to make them less dependent on oil exports. A novel element in our analysis is that we emphasise the role of the deficient educational system as an important problem, next to the well-documented quandary of a high incidence of unskilled foreign workers in the workforce. We use new survey data, both at an establishment level and economy-wide, to provide evidence on how the poor educational facilities lead to a poor provision of training, low skill levels, serious skills mismatch and deficient transfer of knowledge. These inadequate facilities and the lack of incentives to improve them also lead to low R&D efforts to promote local technologies and hamper a restructuring of the economy.

Full Employment Abandoned

This book dismantles the arguments used by policy makers to justify the abandonment of full employment as a valid goal of national governments. Bill Mitchell and Joan Muysken trace the theoretical analysis of the nature and causes of unemployment over the last 150 years and argue that the shift from involuntary to ‘natural rate’ conceptions of unemployment since the 1960s has driven an ideological backlash against Keynesian policy interventions.

Efficiency Wages and Local Wage Bargaining

In the literature on wage drift, it is often argued that strikes or work-to-rule practices are used to force employers to pay a wage rate that exceeds the contract wage. Here, the authors introduce the efficiency wage argument as a foundation for bargaining about wage drift. Contrary to the view in most bargaining models, where firms and unions struggle to divide a fixed pie, given employment, they take the relation between wages and revenues explicitly into account. The implications for wages and employment appear to differ not only with respect to the order of magnitude but also in a qualitative sense. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

Immigration and growth in an ageing economy

This paper argues that immigration can help to alleviate the burden aging presents for the welfare states of most Western Economies. We develop a macroeconomic framework which deals with the impact of both aging and immigration on economic growth. This is combined with a detailed model of the labor market, to include the interaction with low-skilled unemployment. The empirical relevance of some crucial model assumptions is shown to hold for the Netherlands, 1973–2007. The conclusions are that immigration will help to alleviate the aging problem, as long as the immigrants will be able to participate in the labor force at least as much as the native population. Moreover, the better educated the immigrants are or become, the higher their contribution to growth will be.

Employer search and employment subsidies

In this paper insights into the literature on employment subsidy evaluation and that on employer search are merged to explore uncharted territory: the firm and job characteristics leading to deadweight loss in employment subsidy schemes. A model is developed which integrates various arguments found in the existing employer search literature. Using a survey of Dutch firms for 1999, the model predictions are confirmed. The richness of the data set enables one to construct some measures of deadweight loss which are new to the existing literature. It turns out that firms which experience low screening costs (large firms), firms that forego substantial production due to unfilled jobs (vacancies for full-time jobs) and firms operating in slack labour market conditions cause significantly more deadweight loss.

Immigration can alleviate the ageing problem

This paper analyses the way immigration can help to alleviate the burden aging presents for the welfare states of most Western Economies. We develop a macroeconomic framework which deals with the impact of both aging and immigration on economic growth. This is combined with a detailed model of the labor market, to include the interaction with unemployment, while distinguishing between low- and high-skilled labor. The empirical relevance of some crucial model assumptions are shown to hold for the Netherlands, 1973-2005. The conclusions are that immigration will help to alleviate the aging problem, as long as the immigrants will be able to find work. Moreover, the better educated the immigrants are or become, the higher their contribution to growth will be.

The vintage approach to output and employment growth in the Netherlands, 1921–1976

ZusammenfassungDer »vintage«-Ansatz zur Untersuchung des Wachstums von Produktion und BeschÄftigung in den Niederlanden von 1921 bis 1976. — Die Arbeit verfolgt drei Ziele. Erstens soll sie zeigen, in welcher Weise Produktion und BeschÄftigung in den Niederlanden seit den frühen siebziger Jahren analysiert worden sind. Das geschieht durch Fortentwicklung des »clay-clay«-Modells, das in der Den Hartog-Tjan-Analyse verwendet wird. Das zweite Ziel ist, das Grundmodell an bestimmten Stellen zu verbessern, um einige seiner schwÄchsten Eigenschaften zu beseitigen. Drittens soll die SchÄtzperiode verlÄngert werden, damit festgestellt werden kann, in welchem Ausma\ das Wachstum von BeschÄftigung und Produktion in der Nachkriegsperiode von dem der Zwischenkriegszeit abweicht.Die Untersuchung führt zu dem Ergebnis, da\ sich die siebziger Jahre im Hinblick auf die Entwicklung der Reallöhne und des Investitionsniveaus von den drei\iger Jahren deutlich unterscheiden. GemÄ\ der Philosophie, die dem »clay-clay«-Modell zugrunde liegt, bedeutet das für die praktische Politik, da\ die BekÄmpfung der Arbeitslosigkeit mit Hilfe einer keynesianischen antizyklischen Ausgabenpolitik in den siebziger im Gegensatz zu den drei\iger Jahren nachteilige Nebenwirkungen haben kann. Statt dessen sollte man versuchen, den Anstieg der Reallöhne zu bremsen. Das ist die Hauptbotschaft, die sich aus dem »vintage«-Ansatz zur Untersuchung des Wachstums von Produktion und BeschÄftigung ableiten lÄ\t. Aber obwohl die Philosophie, die dem Modell zugrunde liegt, weitgehend akzeptiert worden ist, blieb sie doch nicht ohne Kritik.RésuméL’approche de «vintage» de la croissance de production et d’emploi dans les Pays-Bas, 1921–1976. —Le but de cet article est triple. Premièrement, nous voulons démontrer dans quelle manière on a analysé la croissance de production et d’emploi depuis les premières années soixante-dix. Nous le faisons en appliquant le modèle de «clay-clay» comme il est utilisé dans l’analyse de Den Hartog-Tjan. Deuxièmement, nous voulons élargir le modèle fondamental à certains points pour éliminer quelques aspects les plus faibles. Troisièmement, nous voulons élargir la période d’estimation pour pouvoir déterminer dans quelle mesure la croissance d’emploi et de la production dans la période après-guerre diffère de ceux dans la période inter-guerre.L’analyse mène à la conclusion que, référant au développement des salaires réels et au niveau d’investissement brut, les années soixante-dix diffèrent fortement des années trente. En accord avec la philosophie que le modèle de «clay-clay» prend pour base, les conséquences pour la politique pratique sont que dans les années soixante-dix, en contraste avec les années trente, une lutte contre le chÔmage avec une politique keynésienne des dépenses contre-cyclique n’est pas possible sans des effets négatifs. Au contraire, on devrait essayer de freiner l’augmentation des salaires réels. C’est le message principal de l’approche de «vintage» de la croissance de production et d’emploi. Cependant, bien que la philosophie que ce modèle prend pour base fût largement acceptée, elle n’a pas resté incontestée.ResumenLa aproximación de vendimia para el crecimiento del empleo y el producto en los Países Bajos, 1921-1976. —El objetivo de este trabajo es triple. Primero, mostrar en qué forma se ha analizado el crecimiento del producto y del empleo en los Países Bajos desde principios de la década del 70. Esto se hace transformando el modelo «clay-clay» tal como se usa en el análisis Den Hartog-Tjan. Segundo, enmendar el modelo básico en ciertos puntos de manera de remover algunas de sus características más débiles. Tercero, ampliar el período de estimación para poder establecer en qué medida el crecimiento del empleo y del producto en el periodo de post-guerra difiere de aquéllos del periodo entre-guerras.El análisis lleva a la conclusión que con respecto al desarrollo de los salarios reales y el nivel de inversiones brutas, los anos setenta difieren fuertemente de los años treinta. De acuerdo a la filosofía subyacente al modelo «clay-clay», las consecuencias para una política práctica son que en los años setenta, en contraste a los años treinta, el combate del desempleo por medio de una política de gastos keynesiana anticíclica no está excenta de posibles efectos adversos. En su reemplazo se debería tratar de contener el crecimiento de los salarios reales. Este es el mensaje principal de la aproximación de vendimia para el crecimiento del producto y el empleo. Sin embargo, a pesar de que la filosofía subyacente a este modelo ha sido ampliamente aceptada, no ha permanecido sin desafíos.

Classification of unemployment: analytical and policy relevance

SummaryThe purpose of this paper is to evaluate the way unemployment can be decomposed in several components, and to discuss the analytical and political relevance of such a decomposition. The paper deals systematically with the classifications of unemployment that can be found in the current international literature and fits them into a coherent framework. Finally, the relevance for economic policy of decomposing unemployment into components is discussed.

A permanent effect of temporary immigration on economic growth

Immigration can help to lessen the burden of ageing for the welfare states of most Western economies. To show this, we develop a decomposition framework for Gross Domestic Product (GDP) per capita which deals with the impact of both ageing and immigration on economic growth. Using a Vector Error Correction Model (VECM) for the Netherlands during 1973 to 2009, we demonstrate the empirical relevance of some crucial interactions between elements of that decomposition. The conclusion is that even temporary immigration may help to alleviate the ageing problem through a positive long-term contribution to employment, wages and GDP per capita, as long as the immigrants are able to participate in the labour force in tandem with the native population. Unfavourable short-term effects should be avoided through a gradual phasing in of immigration policies.