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Generality, State Neutrality and Unemployment in the OECD

PublicationArticle (with peer review)
Almas Heshmati, Arbetslöshet, Effektivitet, Företagandets villkor, Löneförhandling, Marcus Box, OECD

Abstract

According to Buchanan and Congleton (1998), the generality principle in politics blocks special interests. Consequently, the generality principle should thereby promote economic efficiency. This study tests this hypothesis on wage formation and labor markets, by investigating whether generality defined as state neutrality could explain employment performance among OECD countries during 1970-2003. We identify three types of non-neutrality concerning unemployment. These include the level or degree of government interference in the wage bargaining process over and above legislation which facilitates mutually beneficial wage agreements, the constrained bargaining range (meaning the extent to which the state favors or blocks certain outcomes of the bargaining process), and the cost shifting (which relates to state interference shifting the direct or indirect burden of costs facing the parties on the labor market). Our overall hypothesis is that non-neutrality or non-generality increases unemployment rates. The empirical results from the general conditional model suggest that government intervention and a constrained bargaining range clearly increase unemployment, while a few of the cost shifting variables have unexpected effects. The findings thus give some, but definitely not unreserved, support for the generality principle as a method to promote economic efficiency. One implication may be that the principle should be amended by other requirements if the political process shall indeed be able to promote economic efficiency.

Related content: Working Paper No. 124

Heshmati, A., Karlson, N., & Box, M. (2013). Generality, State Neutrality and Unemployment in the OECD. Global Economy Journal, 13(3), 333-358.

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Generality, State Neutrality and Unemployment in the OECD
Artikel (med peer review)Publication
Heshmati, A., Karlson, N., & Box, M.
Publication year

2013

Published in
Abstract

According to Buchanan and Congleton (1998), the generality principle in politics blocks special interests. Consequently, the generality principle should thereby promote economic efficiency. This study tests this hypothesis on wage formation and labor markets, by investigating whether generality defined as state neutrality could explain employment performance among OECD countries during 1970-2003. We identify three types of non-neutrality concerning unemployment. These include the level or degree of government interference in the wage bargaining process over and above legislation which facilitates mutually beneficial wage agreements, the constrained bargaining range (meaning the extent to which the state favors or blocks certain outcomes of the bargaining process), and the cost shifting (which relates to state interference shifting the direct or indirect burden of costs facing the parties on the labor market). Our overall hypothesis is that non-neutrality or non-generality increases unemployment rates. The empirical results from the general conditional model suggest that government intervention and a constrained bargaining range clearly increase unemployment, while a few of the cost shifting variables have unexpected effects. The findings thus give some, but definitely not unreserved, support for the generality principle as a method to promote economic efficiency. One implication may be that the principle should be amended by other requirements if the political process shall indeed be able to promote economic efficiency.

Related content: Working Paper No. 124

Effects of employees’ opportunities to influence in-store music on sales: Evidence from a field experiment
Article (with peer review)Publication
Daunfeldt, S.-O., Moradi, J., Rudholm, N., Öberg, C.
Publication year

2021

Abstract

The effects of in-store music on consumer behavior have attracted much attention in the marketing literature, but surprisingly few studies have investigated in-store music in relation to employees. By conducting a field experiment in eight Filippa K fashion stores in Stockholm, Sweden, we investigate whether it is beneficial for store owners to give employees more opportunities to influence the in-store music. We randomly assigned the stores into a treatment group and a control group, with the employees in the treatment stores having the opportunity to influence the in-store music through an app developed by Soundtrack Your Brand (SYB). The experiment lasted 56 weeks and sales data were also gathered 22 weeks before the experiment, resulting in a total of 4626 observations. Our results show that sales decreased by 6% when the employees had the opportunity to influence the music played in the store, and the effect is driven by a reduction in sales of women’s clothing. Interviews with the employees revealed that they had diverse music preferences, frequently changed songs, and preferred to play high-intensity songs. Employees thus seem to make choices regarding the in-store music that reduce sales, implying that store owners might want to limit their opportunities to influence the background music.

Nominated procurement and the indirect control of nominated sub-suppliers: Evidence from the Sri Lankan apparel supply chain
Article (with peer review)Publication
Fontana, E., Öberg, C., Poblete, L.
Publication year

2021

Abstract

This article describes and discusses nominated procurement as a means through which buyers select sub-suppliers to achieve sustainability compliance upstream in emerging economies’ supply chains. Hence, it critically examines the ways buyers articulate nominated procurement and the unfolding supply chain consequences. Based on in-depth interviews and fieldwork in the Sri Lankan apparel supply chain, the findings indicate that buyers accomplish sustainability compliance among their sub-suppliers while prioritizing their own business agenda. In doing so, however, buyers perpetuate “suboptimal compliance” of raw material suppliers and “sandwiching” of direct suppliers as harmful consequences on the supply chain. These consequences link theoretically with commercial, geographical, compliance and extended-compliance pressure. This article contributes to the advancement of the Sustainable Supply Chain Management literature by theorizing about nominated procurement, direct and indirect pressure, and pointing to the supply chain consequences beyond achievements in sustainability compliance.

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