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  • estache_foucart_reforms_01062021

    Rights statement: This is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, 137, 2021 DOI: 10.1016/j.euroecorev.2021.103789

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On the political economy of industrial, labor and social reforms as complements

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On the political economy of industrial, labor and social reforms as complements. / Estache, A.; Foucart, Renaud.

In: European Economic Review, Vol. 137, 103789, 31.08.2021.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

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Estache A, Foucart R. On the political economy of industrial, labor and social reforms as complements. European Economic Review. 2021 Aug 31;137:103789. Epub 2021 Jun 16. doi: 10.1016/j.euroecorev.2021.103789

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@article{4c6a4e70ec8d4e978f838d0ddf543db7,
title = "On the political economy of industrial, labor and social reforms as complements",
abstract = "This paper shows that ignoring the political relevance of labor and social policies can lead to the failure of an industrial policy designed to modernize an economy. Our analysis is based on a simple model of a two-sector economy (one old and one new) in which policy decisions are adopted under a majority rule. This model suggests that unless, (i) the labor policy ensures that workers have enough bargaining power to give them an incentive to find a job matching their skills in a restructured economy and (ii) the government adopts a social policy compensating the losers of the industrial policy, the new sector is unlikely to develop. Moreover, we find that the credibility of the commitments made drives the effectiveness of the coordination of the three policy elements.",
keywords = "Bargaining power, Industrial policy, Voting",
author = "A. Estache and Renaud Foucart",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, 137, 2021 DOI: 10.1016/j.euroecorev.2021.103789",
year = "2021",
month = aug,
day = "31",
doi = "10.1016/j.euroecorev.2021.103789",
language = "English",
volume = "137",
journal = "European Economic Review",
issn = "0014-2921",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - On the political economy of industrial, labor and social reforms as complements

AU - Estache, A.

AU - Foucart, Renaud

N1 - This is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, 137, 2021 DOI: 10.1016/j.euroecorev.2021.103789

PY - 2021/8/31

Y1 - 2021/8/31

N2 - This paper shows that ignoring the political relevance of labor and social policies can lead to the failure of an industrial policy designed to modernize an economy. Our analysis is based on a simple model of a two-sector economy (one old and one new) in which policy decisions are adopted under a majority rule. This model suggests that unless, (i) the labor policy ensures that workers have enough bargaining power to give them an incentive to find a job matching their skills in a restructured economy and (ii) the government adopts a social policy compensating the losers of the industrial policy, the new sector is unlikely to develop. Moreover, we find that the credibility of the commitments made drives the effectiveness of the coordination of the three policy elements.

AB - This paper shows that ignoring the political relevance of labor and social policies can lead to the failure of an industrial policy designed to modernize an economy. Our analysis is based on a simple model of a two-sector economy (one old and one new) in which policy decisions are adopted under a majority rule. This model suggests that unless, (i) the labor policy ensures that workers have enough bargaining power to give them an incentive to find a job matching their skills in a restructured economy and (ii) the government adopts a social policy compensating the losers of the industrial policy, the new sector is unlikely to develop. Moreover, we find that the credibility of the commitments made drives the effectiveness of the coordination of the three policy elements.

KW - Bargaining power

KW - Industrial policy

KW - Voting

U2 - 10.1016/j.euroecorev.2021.103789

DO - 10.1016/j.euroecorev.2021.103789

M3 - Journal article

VL - 137

JO - European Economic Review

JF - European Economic Review

SN - 0014-2921

M1 - 103789

ER -