Understanding Labour Market Institutions: A Political Economy Perspective

Gilles Saint-Paul

No 1438, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this paper we argue that many of the rigidities that characterize European labour markets can be understood as the outcome of political influence by incumbent employees. We then empirically investigate the determinants of labour market institutions and show that the results are consistent with this view. Among other things, we find: that higher exposure of the employed to unemployment facilitates a reduction in the level of employment protection; that unemployment benefits are lower, the more employment reacts to wages; and that a higher level of unemployment and a right-wing government slow down the growth rate of the minimum wage.

Keywords: Employment Protection; Labour Market Institutions; Minimum Wages; Political Economy; Unemployment; Unemployment Benefits (search for similar items in EconPapers)
JEL-codes: E24 H53 J6 (search for similar items in EconPapers)
Date: 1996-10
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Citations: View citations in EconPapers (4)

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