Why we should cut workers rights

You know, make it easier to fire them?

Today\’s Nobel Laureate:

Before the 1970’s, similarly short durations but lower flows into unemployment
meant that Europe had lower unemployment rates than the United States. But since
1980, higher durations have kept unemployment rates in Europe persistently higher
than in the U.S. A general equilibrium search model with human capital explains
how these outcomes arise from the way Europe’s higher firing costs and more generous
unemployment compensation make its unemployment rate depend on a parameter that
determines a worker’s loss of valuable skills after an involuntary job loss.

Yup, higher firing costs mean higher unemployment.

8 thoughts on “Why we should cut workers rights”

  1. It intrigues me, the Left are always the first to say that “neoliberal” economics doesn’t work because of stickiness of various parameters, but then they do everything to make the economy as sticky and inflexible as possible.

  2. Sheesh, he gets the Nobel for stating the bleedin’ obvious?
    Here goes: “our general equilibrium model with polyvalent paradigm parameters shows that if you take away people’s money they spend less money due to financial constraints…”

  3. Unfortunately the Left tends to get popular in these debates because when most people are in employment they will vote for more rights for themselves and the pro-business voices will always get drowned out by the “sending kids up chimneys” argument.

    It was only when the UK economy was properly broken in the late 70s and early 80s that people were prepared to stomach employment reform.

  4. “A general equilibrium search model with human capital explains
    how these outcomes arise from the way Europe’s higher firing costs and more generous
    unemployment compensation make its unemployment rate depend on a parameter that
    determines a worker’s loss of valuable skills after an involuntary job loss.”

    OK, this can be cashed out into words of at least two syllables, and is then judged to be true. Yet you consider this to be a science, Tim?

    Depends what you mean by ‘science’, of course. But hard science it ain’t.

  5. To a point, Lord Copper. People who do have working-class jobs in mainland Europe have a much less shit time of it than people who do in the US.

    We’d need objective studies of, say, 75th percentile and median wages in both countries, and an understanding of the dynamics of unemployment (in Spain-as-high-protection-country, you’re 18 and you live in your mum’s house; in the US-as-low-protection-country, you’re 40 and you’ve got two kids and a subprime mortgage) before saying that the US model is *better for people* rather than merely *results in lower unemployment*.

  6. Hey, John B, do you want to come down to the Costa Fortuna & see how high protection actually pans out?
    Employment law means you pretty well can’t fire anyone once they’ve their feet under the table. Unemployment here’s in the mid 20’s with youth at nearer 40. Minimum wage is lower than UK but that’s not so much a factor. They’re not even getting minimum wage. There’s guys up the coast picking tomatoes for 1,50€ an hour. You can get people off the streets to do most anything for silly money, cash in hand. Most of them are running out of unemployment pay, which is only paid for a limited period, so they’re getting hungry. Not figuratively but literally.
    Yet at the same time you can’t get companies to do what you’re paying them for because the employees are arsewipes. Hopeless, incompetent, lazy tossers. Heaven knows what they’d have to do to get fired though. None of that’d be grounds for dismissal.

  7. Yes, I get that. But the US situation for unskilled workers is absolutely awful too, and Tim’s original assessment ignores the costs of that.

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