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Labour Market Institutions and Their Effect on Labour Market Performance in the New EU Member Countries

28 Pages Posted: 20 Oct 2008  

Kamila Fialová

Charles University in Prague - Institute of Economic Studies

Ondrej Schneider

Charles University - Institute of Economic Studies; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 2008

Abstract

This article focuses on the role of labour market institutions in explaining different labour market developments in European countries, with a special attention to the new European Union member countries. This may allow us to analyse effects of various institutional setups and of their changes on major labour market indicators. We aim at complementing several studies from the late 1990's by using more recent data that allow us to compare institutional setups from the mid 1990's and early 2000's both in "old" and "new" EU member states. We estimate effects of labour market institutions on various performance indicators (unemployment, long-term unemployment, employment, activity rate). Our results confirm that high taxes increase unemployment, while active labour market policies tend to reduce it. We also show that stricter employment protection, higher taxes and larger economic burden represented by the minimum wage decrease employment and activity rate. Moreover, statistical tests indicate that there is a difference in the institutional effects between "old" and "new" EU members.

Keywords: labour market, unemployment, European Union, labour market institutions

JEL Classification: J08, J51, K31

Suggested Citation

Fialová, Kamila and Schneider, Ondrej, Labour Market Institutions and Their Effect on Labour Market Performance in the New EU Member Countries (October 2008). CESifo Working Paper Series No. 2421. Available at SSRN: https://ssrn.com/abstract=1287054

Kamila Fialová

Charles University in Prague - Institute of Economic Studies ( email )

Celetná 13
Praha 1, 116 36
Czech Republic

Ondrej Schneider (Contact Author)

Charles University - Institute of Economic Studies ( email )

Opletalova St. 26
Prague, 11000
Czech Republic
+420 222 112 317 (Phone)
+420 222 112 304 (Fax)

HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=48&lng=cs_CZ

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=48&lng=cs_CZ

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