Labour Shares and Employment Protection in European Economies

39 Pages Posted: 5 Dec 2012

See all articles by Mirella Damiani

Mirella Damiani

University of Perugia - University of Perugia

Fabrizio Pompei

University of Perugia - Department of Economics

Andrea Ricci

ISFOL, Rome (Italy)

Date Written: December 3, 2012

Abstract

Liberalisation of temporary contracts has become an important component of recent labour reforms but up to now available research has not paid attention to the impacts of these institutional changes on functional income distribution. The present paper intends to fill this gap by focussing on the reduction in strictness of employment protection of temporary jobs and analysing its effects on factor shares.

We have estimated labour share, as well as its components, worker pays and employment, by considering country-sector evidence for 14 EU economies and the sample period 1995-2007. We have found that these legislative changes, that have favoured the extensive use of temporary contracts, have contributed to instability of working conditions and caused negative effects on workers’ pays. These impacts have more than counterbalanced the scanty positive effects on employment (due to greater access to the labour market of additional workers, likely young and women), thus leading to a decrease in income share accruing to workers.

Keywords: factor income distribution, labour regulation

JEL Classification: E25, J50

Suggested Citation

Damiani, Mirella and Pompei, Fabrizio and Ricci, Andrea, Labour Shares and Employment Protection in European Economies (December 3, 2012). Available at SSRN: https://ssrn.com/abstract=2184274 or http://dx.doi.org/10.2139/ssrn.2184274

Mirella Damiani

University of Perugia - University of Perugia ( email )

Via A. Pascoli
Perugia, Perugia 06123
Italy

Fabrizio Pompei (Contact Author)

University of Perugia - Department of Economics ( email )

via Pascoli, 20
PG 06123 Perugia, 06123
Italy

Andrea Ricci

ISFOL, Rome (Italy) ( email )

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