Geoscience Reference
In-Depth Information
Risk-wise, Europe is also quite a heterogeneous union. Countries vary largely
in their approaches to the organization and regulation of labor markets, as
reflected by the significant differences in effort on active labor market poli-
cies. These policies are meant to facilitate the retraining of workers in less
demanded occupations, thus enhancing geographical mobility between regions.
According to the data displayed in the right half of
Figure 4.6
, there is indeed
a positive relationship between the effort governments put into active labor
market policies and the level of geographical mobility within countries in the
Union.
10
As governments facilitate transition between jobs, people become
more mobile geographically and the level of risk associated with specific occu-
pations declines; and, since different economic activities tend to concentrate
territorially (Krugman
1991
), so does the risk concentration in particular areas
of the country. In contrast, a weaker policy commitment to facilitate work
transitions limits peoples' ability to move, and contributes to a higher realiza-
tion of labor market risk. The left panel in
Figure 4.6
displays evidence bearing
on this link: there is a negative and significant relationship between the level
of interregional mobility and the incidence of unemployment across European
nations.
Given this background, a common system of unemployment insurance
would necessarily distort the workings of a significant group of countries.
The combination of very generous unemployment benefits with active labor
market policies and fairly unregulated hiring decisions at work in some Scan-
dinavian economies would be either fiscally unfeasible or highly distortive in
most continental labor markets. Likewise, a move toward less generous and
less extensive benefits would alter the complementarities at work in many
European countries between social and labor market policies (Hall and Sos-
kice
2001
; Kenworthy
2008
; Pontusson
2005
). Arguably then, such a move
would be frontally opposed by national governments should it ever become the
path proposed to reform existing social security models. As a result, in light
of the predictions of the model, I expect these patterns to exacerbate the dis-
tributive tensions associated with the geography of income inequality discussed
previously.
Social Policy in the European Union: An Overview
Is it the case that the economic geography of the Union constrains the develop-
ment of a centralized system of interpersonal redistribution? The history of the
European Union is rich in attempts to add a social dimension to the integration
project. Though vaguely mentioned in the founding treaties (art. 117 to 128),
in the
Social Charter
of the Council of Europe as well as in the 1974
Com-
munity Social Action Programme
(Cram
1997
; Hantrais
1995
), social policy,
much like many other realms, gained political salience only when the European
10
Data for
Figure 4.6
correspond to the early 2000s. The fitted lines represent the relationship
excluding the case of Denmark.
