Equality, Employment, and Budgetary Restraint: The Trilemma of the Service Economy

• Published in: World politics Vol. 50; no. 4; pp. 507 - 546
• Main Authors: Iversen, Torben, Wren, Anne
• Format: Journal Article
• Language: English
• Published: Cambridge, UK Cambridge University Press 01-07-1998; Johns Hopkins University Press; Princeton University Press, etc
• Subjects: Budget; BUDGETING, BUDGETS, FISCAL PLANNING; Economic conditions; Economic liberalism; ECONOMIC SYSTEM IN DEVELOPED COUNTRIES; Employment; Equality; Equalization; Government budgets; International politics; Labor markets; Political Economy; Productivity; Public sector; Service economies; Service industries; Unemployment; Wages
• ISSN: 0043-8871; 1086-3338
• DOI: 10.1017/S0043887100007358

This article presents an analysis of the postindustrial economy from a political economy perspective. It identifies a set of specific distributional trade-offs associated with the new role played by the services sector as the chief source of employment growth in advanced democracies over the last three decades. It is argued that three core policy objectives—budgetary restraint, wage equality, and expansion of employment—constitute a political “trilemma” that allows only two of the goals to be successfully pursued at the same time. Using a combination of statistical and caseoriented analysis, the authors demonstrate the political and economic salience of the trilemma, the distributional tensions inherent in each strategy to cope with it, and the political-institutional constraints under which these strategies are chosen.