The main concept underpinning the research programme: the notion of transitional labour markets

Transitional labour markets are institutional arrangements that enable individuals to move between different employment relationships in a coordinated way while retaining an adequate level of social protection and to combine paid and unpaid work as individual circumstances require. Transitional labour markets provide protection not only against unemployment but also against the income and employment risks associated with transitions. They not only provide protection against the risks of such transitions but also offer incentives to take such risks: moving from dependent employment to self-employment or from a full-time to a part-time job, for example, or combining part-time work with training for a new occupation. Transitional labour markets are institutional opportunity structures that prevent unemployment, accelerate the transition from unemployment to employment and enable individuals to plan their lives in partnership with others. The extension of unemployment insurance, turning it into a form of employment or working life insurance that insures or safeguards individuals against all risks to their earnings (not just unemployment), reduces those risks through preventive measures and increases their willingness to accept flexible employment relationships. Thus, in combination with coordinated wage, fiscal and monetary policies, the successful management of the risks associated with transitions over the course of the working life is a central element in the fight to prevent unemployment. In turn, a labour market in which greater flexibility is combined with a reasonable level of social protection increases employment intensity, reduces inflationary wage pressures and thereby contributes to economic growth.

The starting point for the unit’s theoretical approach is the complementary strengths and weaknesses of the institutions and instruments of social and economic governance: markets, hierarchies, networks and citizens’ rights. The aim is to develop a modern theory of governance that combines rational choice theory with the theory of social institutions. This means that institutional path dependencies (long-term obligations created by investments), social norms (such as reciprocity and fairness), power (the ability not to have to learn) and political objectives (e.g. equality of opportunity) have to be explicitly taken into account in research designs and explanatory models.

The unit’s methodological and empirical concerns are focused on analysis of the transitions between various forms of economic activity and inactivity and between various forms of employment dependent on welfare state arrangements. In addition to international, national and regional aggregate data, therefore, increasing use is being made of individual process data (panel data) for the longitudinal analysis of transitional events. The unit’s approach to implementation and evaluation research encompasses qualitative case studies, benchmarking based on a comprehensive regional data bank for Germany, cost-benefit analyses for individual and institutional actors and micro-sociological and micro-economic causal models.