EconPapers    
Economics at your fingertips  
 

Labour Market Institutions and the Personal Distribution of Income in the OECD

Daniele Checchi () and Cecilia Garcia-Penalosa ()

No unimi-1009, UNIMI - Research Papers in Economics, Business, and Statistics from Universitá degli Studi di Milano

Abstract: We examine what determines differences across countries and over time in the distribution of personal incomes in the OECD. We first model the wage determination process and show that unemployment, the labour share, and the wage differential are all functions of labour market institutions. Next we show that in a model economy with only four types of agents - capitalists, skilled and unskilled workers, and unemployed - the Gini coefficient of personal incomes can be expressed as a function of the above three variables. Labour market institutions hence affect income inequality, though the sign of their impact is ambiguous. Stronger unions and/or a more generous unemployment benefit tend to reduce inequality through reduced wage differentials, a higher labour share, and also higher unemployment. We then use a panel of OECD countries for the period 1970-96 to examine these effects. We find, first, that the labour share remains an important aspect of overall inequality patterns, and, second, that stronger unions and a more generous unemployment benefit tend to reduce income inequality. High capital-labour ratios also emerge as a strong equalising factor, which has in part offset the impact of increasing wage inequality on the US distribution of personal incomes.

Keywords: income inequality; labour share; trade unions (search for similar items in EconPapers)
Date: 2005-07-16
Note: oai:cdlib1:unimi-1009
References: Add references at CitEc
Citations: View citations in EconPapers (16) Track citations by RSS feed

Downloads: (external link)
http://services.bepress.com/unimi/economics/art4 (application/pdf)

Related works:
Journal Article: Labour Market Institutions and the Personal Distribution of Income in the OECD (2010) Downloads
Working Paper: Labour market institutions and the personal distribution of income in the OECD (2008) Downloads
Working Paper: Labour Market Institutions and the Personal Distribution of Income in the OECD (2005) Downloads
Working Paper: Labour Market Institutions and the Personal Distribution of Income in the OECD (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bep:unimip:unimi-1009

Access Statistics for this paper

More papers in UNIMI - Research Papers in Economics, Business, and Statistics from Universitá degli Studi di Milano Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().

 
Page updated 2021-07-12
Handle: RePEc:bep:unimip:unimi-1009