Impact Of Labour Market Institutions Research Articles

The impact of labor market institutions and corporate governance on the development of Russian innovation culture

Aim. The presented study aims to investigate the system of factors affecting the development of innovation culture in Russian companies.Tasks. Based on qualitative research, the author comparatively analyzes the main structural components of innovation culture in typologically different Russian companies; determines internal and external conditions for the development of innovation culture; substantiates the leading role of the government in regulating formal labor market institutions that form the patterns of innovation culture in society and facilitate the innovative development of Russian companies.Methods. This study uses the methods of analysis and synthesis, comparison and generalization, and general logical research methods.Results. Innovation in Russian companies involves not only new technologies and materials, the production of new products (services) and their introduction to the market, but also the creation of a cultural environment favorable for innovation. The key role in this process is played not only by internal corporate factors, but also by external ones. A company's internal innovation development system includes the strategic commitment of top management to innovation, creativity as the highest value of corporate culture, and implemented management practices aimed at increasing employee receptivity to innovation. System-wide factors of innovation culture are predetermined by the national education system and labor market institutions.Conclusions. The government plays a leading role in the formation of an innovation culture in society. Creative activity in the Russian Federation has only recently found financial and organizational support at the government level. Therefore, it is important not to lose this value orientation and continue the modernization of social processes aimed at the innovative development of the economy. The focus on the formation of innovative culture should be reflected in the activity of labor market institutions (the Ministry of Labor, employment services, migration service, etc., and in the mechanisms of labor market regulation (state employment policy, trade unions, social partnership, and collective agreements).

Negotiating wage (in)equality: changing union strategies in high-wage and low-wage sectors in Czechia and Slovakia

Reducing wage inequality requires an understanding of the importance of labour market institutions, in particular statutory minimum wages and sectoral collective bargaining. This article argues that the impact of labour market institutions on wage inequality is enhanced by specific strategies of unions and employers. Empirical evidence is provided from the high-wage automotive sector and the low-wage retail sector in Czechia and Slovakia. Against the backdrop of the erosion of collective wage bargaining, trade unions have prioritised increases in the national statutory minimum wage as a mechanism for reducing wage inequalities. Trade unions’ leverage on minimum wages can compensate for their declining influence on wage distribution via collective bargaining.

Wage differentials and segmentation: The impact of institutions and changing economic conditions

This paper uses data from the European Survey on Income and Living Conditions to offer new empirical evidence on how wage differentials are influenced by the changing economic conditions, that is, before and after the 2008–2010 recession, and shaped by the different institutional frameworks of European Union countries. We examine whether wage changes are homogeneous across groups of workers, as they are classified by their contractual relationship and working time, and by the heterogeneity in institutions that regulate and affect the labour market. Results obtained by estimating ordinary least squares and quantile regressions confirm the existence of contract and working time wage gaps and allow to estimate their different magnitudes along the wage distribution, and their rise during the recession. The impact of labour market institutions on shaping them is diverse, with more intervention of the government in the setting of the minimum wage and stricter regulation for atypical contracts reducing the wage gaps and producing larger positive effects for low-wage employees.

The impact of labour market institutions on income inequality: evidence from OECD countries

ABSTRACT Using data from 35 OECD countries for the 1993–2017 period, this paper shows that stronger Labour Market Institutions (LMI), such as trade unions and bargaining coverage, contribute to a decrease in income inequality measured by the Gini coefficient. Additionally, there seems to be a positive interaction effect between unions and bargaining coverage. The marginal impact of trade unions (bargaining coverage) is enhanced by the presence of high levels of bargaining coverage (trade unions). Notwithstanding, this impact seems to be higher for bargaining coverage. On average, an increase in unions’ density (bargaining coverage) by 1% leads to an estimated decrease in inequality by 0.30% (0.35%), ceteris paribus.

Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America

This paper documents recent labor market performance in the Latin American region. The paper shows that unemployment, informality, and inequality have been falling over the past two decades, though still remain high. By contrast, productivity has remained stubbornly low. The paper, then, turns to the potential impacts of various labor market institutions, including employment protection legislation (EPL), minimum wages (MW), payroll taxes, unemployment insurance (UI) and collective bargaining, as well as the impacts of demographic changes on labor market performance. The paper relies on evidence from carefully conducted studies based on micro-data for countries in the region and for other countries with similar income levels to draw conclusions on the impact of labor market institutions and demographic factors on unemployment, informality, inequality and productivity. The decreases in unemployment and informality can be partly explained by the reduced strictness of EPL and payroll taxes, but also by the increased shares of more educated and older workers. By contrast, the fall in inequality starting in 2002 can be explained by a combination of binding MW throughout most of the region and, to a lesser extent, by the introduction of UI systems in some countries and the role of unions in countries with moderate unionization rates. Falling inequality can also be explained by the fall in the returns to skill associated with increased share of more educated and older workers.

Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America

This paper documents recent labor market performance in the Latin American region. The paper shows that unemployment, informality, and inequality have been falling over the past two decades, though still remain high. By contrast, productivity has remained stubbornly low. The paper, then, turns to the potential impacts of various labor market institutions, including employment protection legislation (EPL), minimum wages (MW), payroll taxes, unemployment insurance (UI) and collective bargaining, as well as the impacts of demographic changes on labor market performance. The paper relies on evidence from carefully conducted studies based on micro-data for countries in the region and for other countries with similar income levels to draw conclusions on the impact of labor market institutions and demographic factors on unemployment, informality, inequality and productivity. The decreases in unemployment and informality can be partly explained by the reduced strictness of EPL and payroll taxes, but also by the increased shares of more educated and older workers. By contrast, the fall in inequality starting in 2002 can be explained by a combination of binding MW throughout most of the region and, to a lesser extent, by the introduction of UI systems in some countries and the role of unions in countries with moderate unionization rates. Falling inequality can also be explained by the fall in the returns to skill associated with increased share of more educated and older workers.

Current Accounts and Coordination of Wage Bargaining

This study provides novel evidence on the impact of labor market institutions on current account dynamics. Our results suggest that a high degree of coordination of wage bargaining has a positive effect on the current account balance over the long run. This result is not driven entirely by wage moderation induced by centralized wage setting. We also provide robust evidence that a high degree of coordination of wage bargaining is associated with a slower current account adjustment toward its long-run equilibrium. This result seems theoretically plausible; the aggregate shocks in the exporting sector are largely driven by idiosyncratic shocks and the presence of idiosyncratic shocks increases the importance of labor market flexibility. Overall, our analysis of the impact of labor market institutions on current account dynamics complements the existing empirical current account literature focused on macroeconomic and financial measures.

Do Interactions between Finance and Labour Market Institutions Affect the Income Distribution?

AbstractThis article analyses the linkages between financial development, labour market institutions and market income inequality for 18 Organisation for Economic Co‐operation and Development countries over the 1980 to 2012 period. With the help of a dynamic panel data model with an interacted term, one crucial contribution of this article is to analyse the interacted impact of labour market institutions (i.e. union density and employment protection legislation) on the one hand and financial development on the other hand on the income distribution. Our results indicate that changes in the financial/credit and labour market regulation affect the income distribution. Estimates of the marginal effects show that by increasing labour market regulation one also weakens the impact of the flexibilization in the financial/credit market on the increase in income inequality.

Governance of Sustainable Security: The Impact of Institutions and Values on Labour Market Transitions Using ESS and SILC Data?

The paper examines the impact of labour market institutions and social norms and values on the relative performance of countries in balancing flexibility and security. In a previous paper (Muffels, 2010) we defined a set of institutional and transition outcome indicators to compare the relative labour market performance of 26 countries in the EU on these two dimensions. The picture provided little support for the supposition that regimes tend to converge. In this second paper we try to explain the transition patterns we observe. We are particularly interested in the impact of labour market institutions and social norms and values on these transition patterns. The institutions to examine concern not only the usual candidates such as EPL, Unemployment Insurance and Active Labour Market Policy but also various indicators for the wage bargain such as union density, collective agreement coverage and level of centralisation or decentralisation. The novelty is that we also consider the effects of social norms and values in society associated with work orientations and feelings of trust and altruism. We estimate multi-level multinomial regression models with country fixed effects on integrative and exclusionary labour market transitions. Integrative transitions refer to job-to-job transitions, transitions from a fixed-term into a permanent job and re-entry into employment; exclusionary transitions to exit out of employment. The evidence confirms that employment regulation exerts negative effects and UI generosity and trust positive effects on integrative transitions. Support is found for the positive impact of UI generosity on the job match. Labour market policy and wage bargain indicators exert counterintuitive or small and insignificant effects.

Impact of Labor Market Institutions on Unemployment: Results from a Global Panel

Policies and programs designed to protect workers may, paradoxically, have a negative impact on labor as a whole by increasing unemployment. A key question is which policies have this effect. Using a 3-year panel of 90 countries, the study finds that the unemployment rate is affected by the existence, duration, and replacement rate of unemployment insurance. Hiring and retrenchment regulations and the nature of collective bargaining, however, are not significantly correlated with unemployment. These results are broadly in line with the extensive literature on countries of the Organisation for Economic Co-operation and Development but are at odds with the few cross-country studies that have considered a wider sample. These findings question again whether the deregulation of labor markets in developing countries will improve labor market outcomes.

Measuring the effect of institutional change on gender inequality in the labour market

This article examines the differential impact of labour market institutions on women and men. It carries out longitudinal analyses using repeat cross-sectional data from the EU Labour Force Survey 1992–2007 as well as time series data that measure institutional change over the same period. The results contribute to the literature on gendered employment, adding important insights into the impact of labour market institutions over and above family policies that have been the focus of most prior studies on the topic. We find differential effects of institutional change on male and female outcome. Our findings challenge the neo-classical literature on the topic. While our results suggest that men benefit more clearly than women from increases in employment protection, we do not find support for the neo-classical assertion that strong trade unions decrease female employment. Instead, increasing union strength is shown to have beneficial effects for both men's and women's likelihood of being employed on the standard employment contract. Furthermore, in line with other researchers, we find that rising levels of in kind state support to families improve women's employment opportunities.

Labour Market Regulation and Business Entry

Regulation of labour markets is often viewed as being hostile to entrepreneurship. Several studies investigate the effects of labour market institutions on entrepreneurship in terms of self-employment but there is a relatively small number of international studies relating labour market institutions to business creation. This paper empirically investigates the impact of labour market institutions (the bargaining power of trade unions, unemployment benefits and labour income taxation) on business entry in chosen OECD countries over the period 1995-2007. To take into account a specific structure of time-series cross-section data, the regression equation that explains business entry is estimated by two alternative approaches: the feasible generalized least squares approach proposed by Parks (1967) and the panel corrected standard errors approach proposed by Beck and Katz (1995). The regression analysis gives mixed results about the impact of union bargaining power, unemployment benefits and labour income taxation on business entry. The business entry rate is negatively associated with obstacles to getting a credit and the size of country’s population, but positively associated with trade openness.

Unemployment benefits, job protection, and the nature of educational investment

This paper examines the impact of labor market institutions covering the risk of unemployment on the nature of educational investment. We offer a matching model of unemployment in which individuals of a given education determine the scope (or adaptability) and intensity (or productivity) of their human capital before entering the labor market. Our model features an increasing relationship between match surplus and the return to adaptability skills. This relationship explains why matching frictions promote adaptability skills instead of productivity skills, and why unemployment benefits and job protection create the incentive for productivity skill acquisition.

Labor Market Institutions and Informality in Transition and Latin American Countries

This paper analyzes, using country-level panel data from transition economies and Latin America, the impact of labor market institutions on informal economic activity. The measure of informal economic activity is taken from Schneider et al. (2010), the most comprehensive study to date. The data on institutions, which cover employment protection legislation (EPL), the tax wedge, the unemployment benefit level, unemployment benefit duration and union density, are assembled at the IZA (transition countries) and the World Bank (LAC countries). We find that a more regulated labor market (higher EPL) increases the size of the informal economy. There is also evidence that a larger tax wedge increases informality. The tax wedge elasticity of informal economy, when evaluated at the sample mean, is rather modest, around 0.1%. Our results are broadly in line with the literature, which identifies labor market regulation and the tax wedge as important drivers of informality.

Labour Market Institutions and Unemployment: Does Finance Matter?

We explore whether finance influences the impact of labour market institutions on unemployment. Using a data set of 18 OECD countries over 1980–2004, we estimate a panel Vector AutoRegressive model. We check whether causalities from labour market variables to unemployment are affected by financial factors. In Belgium, Italy, Australia, Japan and Spain, accounting for financial indicators mitigates the benefits of labour market flexibility or makes it harmful to employment. In Austria, Canada, Finland and Portugal, it reduces its detrimental impact or makes it beneficial. In Ireland and Netherlands, both effects prevail, depending on the labour market indicator used.

Labour Market Models in the EU

In the European Union, the most important labour market models that have been proposed for labour market reform are flexicurity and the transitional labour market. In this position paper, we conceptualise the models of flexicurity and the transitional labour market, and we outline potentially relevant research questions. These research questions focus on explaining the variations in labour market policies across EU countries and the impact of labour market institutions on labour market outcomes as well as innovation and the adoption of new technologies.

Labour Market Institutions and Unemployment: Does Finance Matter?

We explore whether finance influences the impact of labour market institutions on unemployment. Using a data set of 18 OECD countries over 1980-2004, we estimate a panel Vector AutoRegressive model. We check whether causalities from labour market variables (labour market regulation, union density, coordination in wage bargaining) to unemployment are a ffected by the introduction of financial factors (stock market capitalisation, intermediated credit and banking concentration) in the estimation. In Australia, Belgium, Italy, Japan and Spain, accounting for financial indicators mitigates the bene fits of labour market flexibilization or makes it harmful to employment. In Austria, Canada, Finland and Portugal, it reduces its detrimental impact or makes it bene ficial. In Ireland and Netherlands, both e ffects prevail, depending on the labour market indicator used.

THE DETERMINANTS OF YOUTH TEMPORARY EMPLOYMENT IN THE ENLARGED EUROPE

ABSTRACT This article uses comparative micro data from the 2004 European Union Labour Force Survey (EULFS) for 23 European countries to study the impact of labour market institutions on the youth relative temporary employment probability. We find relatively high temporary employment rates for young workers in all countries but also a large cross-country variation in this respect. The results of multi-level regression analyses confirm that neither employment protection of regular contracts nor its interaction with the level of employment protection of temporary contracts affects the young people's relative risk. Instead, we find a positive association between collective bargaining coverage as a measure of insider–outsider cleavages and the relative temporary employment risk of young persons. These results remain robust even after controlling for macro-structural conditions, such as unemployment rate and business uncertainty.

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

A large literature has studied the impact of labour market institutions on wage inequality, but their effect on income inequality has received little attention. This paper argues that personal income inequality depends on the wage differential, the labour share and the unemployment rate. Labour market institutions affect income inequality through these three channels, and their overall effect is theoretically ambiguous. We use a panel of OECD countries for the period 1960–2000 to examine these effects. We find that greater unionization and greater wage bargaining coordination have opposite effects on inequality, implying conflicting effects of greater union presence on income inequality.

Labour market institutions and income inequality

Labour market institutions are a crucial determinant of wage inequality, the wage share in aggregate income, and the unemployment rate. Since these variables affect, in turn, the distribution of income across households, the question arises of whether stronger labour market institutions have an impact on income inequality. Institutions can in principle have conflicting effects. For example, a higher unemployment benefit tends to increase the wage share, which in turn reduces inequality, but it also increases the unemployment rate thus making the distribution of income more unequal. This paper examines what is the overall impact of labour market institutions on household income inequality. The evidence indicates that stronger institutions are associated with lower income inequality, but in some cases also with higher rates of unemployment. We explore the magnitude of this trade-off, and quantify the changes in inequality and unemployment that we would observe if a common labour standard were imposed on members of the European Union. — Daniele Checchi and Cecilia García-Peñalosa