The theory , or the model of the insiders/outsiders is a theoretical Modèle Néo-keynésien which makes it possible to explain certain rigidities at the time of recruitment on the Job market. It appeared in 1988, in particular with work of the economists Assar Lindbeck and Dennis Snower.

The ideal model

This model opposes on the one hand the insiders , for example paid with a stable contract (such as for example on the French market holders of a TDCI) and other the precarious outsiders , hard-working or unemployed. It is about a representation of the job market based on the idea of dualism of the job market of Paul Osterman. The outsiders of which it is question, often young people (age bracket of 18-24 years) and little qualified, newcomers on the job market, would be ready to work for a Salaire less low than that of the insiders (their Salaire of reserve is weaker), whereas one does not leave them the possibility of it.

This model makes it possible to release the fact that in the decision of recruiting the amount of the wages is not the only element to enter in account. The employer, in his decision of recruiting or renewal of employee, will have to integrate the cost of the Turnover, which includes/understands for example the cost of dismissal of the former personnel, that of recruitment, the cost of adaptation of labor to the station, as well as the resistance of the employees in place. Moreover, the national regulation can fix a Minimum wage, which constitutes a disadvantage relative for the recruiting of outsiders , who are generally, to the beginning, not very productive.

The analysis in term of insiders/outsiders insists thus on the role of the action, and in particular of the union action, the insiders , which have means of pressure on the management of the firms (Grève, strike pickets, work-to-rule strike,…). They benefit from this way of true a Secure income in order to increase the cost of the turnover, which increases their capacity of negotiation and thus allows them to obtain increases which carry their wages beyond the current remuneration of the job market, with the detriment of the recruiting of new employees and the effectiveness of the company. In this case, the insiders and their trade-union representatives privilege their individual interest before the “collective good”, even it “many workers” (according to the Marxist optics of the division of work).

The theory results in concluding that to support the flexibility of the job market will lead to a distribution more “right” of employment, each one being able to lose its employment vis-a-vis a more qualified outsider. In the same way, by reducing the risk and the cost of dismissal caused by the strategies of the insiders for the employers, those will be more inclined to engage, and thus to reduce unemployment while increasing the productivity of their company. What leads to more growth and of consumption, and thus even less unemployment (concept of the Virtuous circle, often used in the theories keynésiennes).

Endogenous rigidities at the job market to be connected

Being added and reinforcing the model insiders/outsiders , other theories explain rigidity at the time of recruitment. It can be due to the wage increase to the detriment of the application for a job. In this situation, insiders in place are paid more (overtime, increases, premiums, etc), which encourages them to better work more and, and the total request for work of the companies decreases. The Salaire of efficiency is then higher than the wages of market equilibrium, which makes it possible to await a greater productivity on behalf of the employee.

One can also note the development of cultures of companies, which more imply the employee with the result of his work, partly in a search for productivity, but which concentrates on a “hard core” of employees, precisely of the insiders . Lastly, the thesis of the Implied contract of Costas Azariadis implies the idea that the stability of employment is as much required by the employer that by the employees (this is due to their Aversion with the risk and by the phenomenon of training (the employees learn with the wire time the wheels from their station); this phenomenon goes partly against the flexibility, which for the Néoclassique S supports employment.

Limits of the theory

There exists certainly, on a side an application for a job dissatisfied, and other of the Chômeurs, but the phenomenon insiders/outsiders of this theory néo-keynésienne cannot explain to it only the total situation on the job market.

One can reproach this theory néo-keynésienne his lack of human reality: admittedly there exists a dissatisfied offer of work, but this phenomenon is not representative of aggregate unemployment; it tends moreover to reveal like “favoured” employees having a traditional work contract (TDCI) with its welfare benefits, whose the outsiders always ready would be victims to work.

To reabsorb this situation would tend to support the emergence of “Travailleurs the poor”.

From a total point of view, the cost for the company would be however weaker and increased GDP. On line with the recent evolutions in the developed countries, the installation of negative taxes (Premium for employment in France) permetrait to fight against the phenomenon of “poor worker”.

For the economists Marxist S, the action of the insiders to support the recruiting with favorable conditions (for example under permanent contract rather than given, in a wage grid rather than with negotiated wages), can be seen not like a fight supporter of corporatism but with the objective to make prevail standards applicable to all the employees.

These economists consider whereas the purpose of the theory of the insiders/outsiders is to make endorse the “responsibility” for unemployment to the individuals of the working class, whereas it is born according to them from the capitalist logic (i.e. the middle-class class) for which unemployment is not a problem, since by creating a “reserve army” always available to lower costs, it makes it possible to the employers to be in strong position on the job market.

The neo-classic theory shows that a fall of unemployment in on this side NAIRU generates rises of wages, and that a situation of “full employment” would cause big wage rises, as that was the case with the the United Kingdom or the the United States at the end of the Années 1990. The existence of an unemployment higher than NAIRU would result then from a bad adjustment of the wages (rigidity to the fall), due precisely to the phenomenon of insiders/outsiders .

Applications of the theory

Situation on the job market

Statistically the high-risk population of unemployment and poverty gathers people who have weak a Professional training and/or the physical handicaps and mental. This section of the population is typically “out” of the market of the work (“outsiders”) and most likely to be the engaged last and the laid off first. By comparison, those which have a good professional training and experiment are the insiders . Taking into account this serious Dichotomy, the outsiders (respectively insiders ) can be regarded as variable costs (resp. fixed costs) by the companies. The ousiders will be engaged only at the time of the high phases of the Business cycles.

To facilitate the recruiting of the outsiders , it would be necessary that their cost of recruiting for the company is weaker, and that the constraints to engage or lay off decrease. In certain countries of continental Europe like the France or the Germany, the Welfare state and the social system which is associated for him supports the existence of insiders (Minimum wage, Social security, 35 hours, 6 weeks of holidays, forced against the dismissal, etc) while involving a cost which is often deferred on the companies (social contributions, IS, etc), and which, by decreasing the marginal productivity of the employees, lowers the total “request” for work of the companies, and thus in fine exerts a negative influence on the wages and unemployment.

In France, the elevated level of SMIC, and the social contributions, are regarded by the majority of the economists as brakes at the time of recruitment of the outsiders . It will be noted however that the social contributions on the level of SMIC were reduced during the Années 2000 in order to fight against the exclusion of the outsiders of the job market.

Another application of the theory can be in the case of the clandestine immigrants. As one could realize some in the south of the the United States these 20 last years, a sufficiently important surge clandestine immigrants pushes the wages of the employment not strongly qualified to the bottom and increases official unemployment. Indeed, the companies want to circumvent protections of the " insiders" (minimum wage and social protection in fact) and take the risk to engage of the illegal workers " with the noir" who cost them much less. That causes the deficit of the Social Security and the precarisation of the most vulnerable sections of the population. In order to fight against this phenomenon, the policies set up control campaigns in the companies and regularize (or expel) the immigrants in irregular situation.

Economic policy countering this phenomenon

In practice, the economic policies implemented to reach this flexibility consist to remove certain legal protections of paid (to support the purely contractual relations), privatiser the state enterprises and/or to remove the special statutes of the civils servant, and especially to reduce considerably the influence of the trade unions and other groups of economic lobbying.

Vis-a-vis the situation the financial strangulation of the the United Kingdom in the Years 1970, such measurements were integrated in the economic program of the Prime Minister Britannique Margaret Thatcher. Firmness vis-a-vis the reactions of the insiders , in particular vis-a-vis terrible the Strike of the British minors of 1984-1985 which failed at the end of one year of fight, destroys the English trade unionism. This program brought prosperity to England, reduced the number of unemployed but supported the emergence of workers with low-incomes. The government of Tony Blair had taken measures (Minimum wage) to face this situation

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