Political instability and labour market institutions

Claudio Lucifora () and Simone Moriconi

European Journal of Political Economy, 2015, vol. 39, issue C, 201-221

Abstract: This paper investigates the relationship between political instability and labour market institutions. We develop a theoretical model in which political instability creates incentives for a government to introduce labour market regulation in the economy. The distortionary effect of regulation on unemployment effectively puts a constraint on the design of fiscal and public policies. We empirically investigate these predictions using panel data for 21 OECD countries for the period 1985–2006. Our results are consistent with the view that political instability is associated with more regulated labour markets, lower labour taxation, and lower unemployment benefit replacement rates.

Keywords: Political instability; Public good provision; Labour market institutions (search for similar items in EconPapers)
JEL-codes: H11 J64 J88 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Political Instability and Labor Market Institutions (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:39:y:2015:i:c:p:201-221

DOI: 10.1016/j.ejpoleco.2015.05.003

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