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Labour market regulation, industrial relations, and technological regimes: a tale of comparative advantage

Andrea Bassanini () and Ekkehard Ernst ()

CEPREMAP Working Papers (Couverture Orange) from CEPREMAP

Abstract: In this paper we present comparative evidence from OECD countries concerning the impact of labour market institutions and regulations on technological specialisation. The interplay between the degree of labour market flexibility, the systems of industrial relations and the knowledge base of different industries determines the viability of different human resource strategies thereby shaping the patterns of comparative advantage. Our empirical results show that countries with coordinated industrial-relations systems and strict employment protection tend to specialise in industries with a cumulative knowledge base. We argue that two mechanisms explain these patterns. The larger the scope for resorting to internal labour markets, the lower the adjustment costs imposed by labour market regulation. Furthermore, employment protection and coordinated industrial-relations regimes, by aligning workers' and firms' objectives, encourage firm-sponsored training as well as the accumulation of firm-specific competencies, allowing firms to fully exploit the potential of the international labour marke.

JEL-codes: O31 O33 J50 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2001
New Economics Papers: this item is included in nep-dev, nep-ent, nep-lab, nep-mac and nep-reg
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Journal Article: Labour market regulation, industrial relations and technological regimes: a tale of comparative advantage (2002)
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