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JakeS:
this is A Very Bad Idea, because the problem is not with competitiveness, it is with a lack of demand, which is not solved by wage cuts - quite the contrary, they make things worse
If wage cuts still result in a larger aggregate income for the workers than unemployment subsidies, then the wage cuts are a stop-gap measure.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 04:51:30 AM EST
[ Parent ]
Assuming that they are in an A-kasse, and assuming that they are mostly unskilled labour, it will not result in a noticeably larger income than unemployment subsidies.

Skilled labour is another story.

Still, it's nothing that higher unemployment subsidies cannot solve.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 05:05:41 AM EST
[ Parent ]

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