Citation

Discussion Paper Details

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Title: Understanding Labour Market Institutions: A Political Economy Perspective

Author(s): Gilles Saint-Paul

Publication Date: October 1996

Keyword(s): Employment Protection, Labour Market Institutions, Minimum Wages, Political Economy, Unemployment and Unemployment Benefits

Programme Area(s): Human Resources and International Macroeconomics

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.

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Bibliographic Reference

Saint-Paul, G. 1996. 'Understanding Labour Market Institutions: A Political Economy Perspective'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1438