Thread by @lincaktravail

Interesting, Singapore and Malaysia both used labour market policy —tripartite wage setting and payroll taxes levied on workers in low productivity industries to fund re-training & re-skilling program— as an instrument of industrial policy. @jdcmedlock

onlinelibrary.wiley.com/doi/abs/10.111…

You can simply designate some industries as "low productivity sunset industries" and just slap some payroll taxes on their workers as disincentive. The revenue are then used to fund training and re-skilling programs for workers to shift into high productivity sunrise industries.

There is also similarity between the Rehn-Reidner model in that union cooperation and ensuring job security (through subsidised active labour market policies and re-training programs) is needed in restructuring from low-productivity towards high-productivity economy.

As a matter of fact, this article also argues that labour market deregulation and wage repression might not be effective as it allows firms to be dependent on a large pool of cheap labour, thus preserving low wage low productivity firms and make them complacent/fail to innovate.