Labor Market Institutions Around the World

Richard Freeman

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper documents the large cross-country differences in labor institutions that make them a candidate explanatory factor for the divergent economic performance of countries and reviews what economists have learned about the effects of these institutions on economic outcomes. It identifies three ways in which institutions affect economic performance: by altering incentives, by facilitating efficient bargaining, and by increasing information, communication, and trust. The evidence shows that labor institutions reduce the dispersion of earnings and income inequality, which alters incentives, but finds equivocal effects on other aggregate outcomes, such as employment and unemployment. Given weaknesses in the crosscountry data on which most studies focus, the paper argues for increased use of micro-data, simulations, and experiments to illuminate how labor institutions operate and affect outcomes.

Keywords: labour market; unemployment (search for similar items in EconPapers)
JEL-codes: J01 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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https://cep.lse.ac.uk/pubs/download/dp0844.pdf (application/pdf)

Related works:
Working Paper: Labor market institutions around the world (2008)
Working Paper: Labor Market Institutions Around the World (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0844

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