Efficiency and Distributional Effects of the Two-Tracked Labour Market Institutions in Albania

Abstract

This study examines the efficiency and distributional effects of selected labour market institutions in Albania, a rather under-researched country. An initial overview of the post-communist developments articulates why Albania has the poorest labour market performance among other South East European countries. Using a set of mixed qualitative and descriptive quantitative methods we find evidence of inefficient segmental effects and a predatory structure of labour market institutions which noticeably diverge from the efficient institutions point of reference. The institutional/welfare regime at the cross-national level points out at a relationship between the labour market institutional framework and labour market performance, as measured by unemployment. At the country level, a disproportional relationship between the ‘de jure’ labour market regulation and unemployment is identified, which is also moderated by the interaction between labour market and economic institutions.