Skip to main content

CEP discussion paper

Employment Outcomes in the Welfare State


We examine the implications of tax and subsidy policies for employment in the 'three worlds of welfare', Anglo-Saxon, Continental European and Scandinavian. We argue that home production is key to a proper evaluation of the employment outcomes. Anglo-Saxon low-support policies encourage more overall market employment. Continental transfer polilcies encourage more home production in services with close substitutes at home. Scandinavian policies give incentives to move home production in social services to the market but discourage other service activity. We find support for our claims in sectoral employment data for five representative countries, United States, Britain, France, Italy and Sweden.


L. Rachel Ngai and Christopher A. Pissarides

February 2008     Paper Number CEPDP0856

Download PDF - Employment Outcomes in the Welfare State

This CEP discussion paper is published under the centre's programme.