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Symposium 2008

Proposal - Some ideas about "How globalization transforms the welfare state"

The Challenge

What are the implications for welfare state eform? What constellation of welfare state policies enables us to compensate the losers from globalization without harming incentives to work and acquire ...

What are the implications for welfare state eform? What constellation of welfare state policies enables us to compensate the losers from globalization without harming incentives to work and acquire skills? What are the appropriate roles of the state, firms, housholds and civic organizations in the provision of welfare services?

  1. Globalization creates better growth and employement opportunities but also inequalities. Together with technological change increases mobility and less stable professional careers. Free movement of capital gives incentives to lowering direct taxes and put limits to progressive tax systems. Ageing puts additional pressure on public finances.
    Taking into account all these elements, financing the welfare state requires some important changes. Employability -increasing the human capital stock of each individual- becomes more important than passive unemployment protection. Life long learning is of the essence, to update and adapt the initial formation provided by the educational system. Life cycle is changing: entrance in the labour market takes place later and the retirement age is postponed accordingly, given the extension of life expectancy.
  2. The idea of personal accounts can be consistent with the changes mentioned above. But in this field market failure is a real risk, so I would suggest to analyse very carefully the social consequences of using this instrument. If not, we can add new inequalities to those created by globalisation.
  3. The idea of "hiring vouchers" seem to me an attractive way to promote active labour policies and eliminate negative incentives to work. Being spanish Labour minister in 1984 I launched a scheme based upon this idea, that I think offered good results.

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