The IMF is absolutely making such suggestions, though the WB isn't so
much. See for example the chapter on labor market reforms proposed for
the EU in the May 1994 issue of the Fund's World Economic Outlook. In a
phrase, the recommendation is - become more American!
An interesting bit in the WEO chapter is the IMF's response to criticisms
that the American model leads to polarization of incomes. I'll quote this
in full because it is so delicious: "However, the broader [!] wage
distribution that may arise from labor market liberalization does not
necessarily imply a less egalitarian income distribution [?] or lower
real wages for less-skilled workers over the longer term. This is because
stronger growth and higher average levels of employment imply larger
income gains for the economy as a whole, and because governments can
redistribute income through the tax and transfer system to offset adverse
distributional effects. Indeed, distributional objectives can be achieved
more efficiently through the tax and transfer system and through improved
education and training than through regulations that distort the
functioning of the labor markets." The last point includes a footnoted
reference to Gilles Saint-Paul, "Searching for the Virtues of the
European Model," IMF Working Ppaer 94/46 (April 1994). A favorable
contrast is drawn between Germany, which has a low (4%) youth unemployment
rate and no minimum wage, and France, which has a high youth unemployment
rae (22%) and a minimum wage. I'd be interested in German comment on this.
But the American model works as it does precisely because the tax and
transfer system *doesn't* offset its distributional consequences.
The Fund continues: "It is questionable whether European labor market
regulations and institutions actually reduce income inequalities. To the
extent that these policies primarily protect those already employed and
have the perverse effect of increasing unemployment -- which tends to be
concentrated on the most vulnerable and least-skilled segments of
society, often including first-time job seekers -- they may increase
rather than reduce inequality. This is particularly true of policies such
as overly generous unemployment benefits which may cause unemployment to
be concentrated in specific segments of society that remain jobless for
long periods -- as is much more the case in Europe than in other
industrial countries... -- rather than to be spread across a broader
cross section of society that would be subject to short spells of
unemployment. Similarly, policies such as minimum wages may increase
unemployment among low-skilled workers...; equity objectives would be
better served if these workers were employed at a somewhat lower wage,
with the state providing supplemental income support if necessary."
Luxembourg Income Study figures show unequivocally that US income
distribution _after taxes and transfers as well as before_ is far more
unequal than Western Europe's, and probably is the most unequal in the First
World. The IMF is trafficking in fantasy.
Doug
Doug Henwood [[EMAIL PROTECTED]]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)
On Mon, 20 Jun 1994, Arbeitslosenselbsthilfe Oldenburg wrote:
> We would like to know, if the IMF or WB are making recommendations on
> labour market and social policy _within_ the G7 countries. If there exists
> such recommendations or articles on this issue, please tell us how we can
> get it.
>
> In Solidarity, Ulf
>
> --
> Arbeitslosenselbsthilfe Oldenburg (ALSO)
> Kaiserstr. 19, D-26122 Oldenburg (Oldenburg), FRG
> Tel: 0441-16313 (+49-441-16313), Fax: 0441-16394 (+49-441-16394)
> E-Mail: [EMAIL PROTECTED] (Internet), [EMAIL PROTECTED] (/CL)
>
>
