The controversies over European social model institutions converge in the basic issue of whether there is necessarily a trade-off between higher employment and lower inequality. The cases and broader studies suggest that the answer is no, and that the employment effects of counteracting markets’ tendency to generate inequality depend on how it is done. But employment also depends on whether macroeconomic policy assures the conditions for it by counteracting markets’ tendency to generate macroeconomic instability. Policy massively failed to do so not only in the interwar Great Depression, but also in the Great Recession in America and especially Europe, where the gaps in the Eurozone’s economic governance institutions left it without the instruments to cope with the crisis. The chapter thus concludes that those institutions’ consequences for employment vastly outweigh any employment effects social models may have, however much variations among them may have aggravated or ameliorated the employment impact of the crisis, whose sources lie elsewhere.
European Social Models From Crisis to Crisis: Employment and Inequality in the Era of Monetary Integration Jon Erik Dølvik & Andrew Martin
Martin, A. & Dølvik, J. E. (2015). Conclusion. In Dølvik, J. E. & Martin, A. (eds.), European Social Models from Crisis to Crisis: Employment and Inequality in the Era of Monetary Integration (386-391). Oxford: Oxford University Press. https://doi.org/10.1093/acprof:oso/9780198717966.003.0012
