Economic Discontent versus Social Commitment in Economic Development

Rühl, Christof and Vinogradov, Viatcheslav (July 1996) Economic Discontent versus Social Commitment in Economic Development. Former Series > Reihe Osteuropa / East European Series 36


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Abstract: The paper investigates the role of social cohesion in economic development. We capture 'social cohesion' as society's willingness to accept lower wages to increase employment, and as its willingness to offer benefit payments to the unemployed. The lower the minimum wage rate and the higher the welfare payments, the more cohesive the society, and vice versa. We compare two economies which differ only in this respect. We analyze how they react to shocks of different magnitudes. We show that for minor disturbances the less cohesive economy exhibits superior performance, while the reverse becomes true as the size of the shock increases. The Central and Eastern European transition economies exemplify the argument.;

Item Type: IHS Series
Keywords: 'Economic Development' 'Growth Theory' 'Transition Economies'
Classification Codes (e.g. JEL): E24, O11, P17
Date Deposited: 26 Sep 2014 10:36
Last Modified: 01 Apr 2016 14:10

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