Understanding Labor Market Institutions: A Political Economy Perspective

CEPR Discussion Paper Series 1438

Posted: 8 Jan 1997

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: October 1996

Abstract

In this paper we argue that many of the rigidities that characterize European labor markets can be understood as the outcome of political influence by incumbent employees. We then empirically investigate the determinants of labor 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.

JEL Classification: E24, H53, J6

Suggested Citation

Saint-Paul, Gilles, Understanding Labor Market Institutions: A Political Economy Perspective (October 1996). CEPR Discussion Paper Series 1438. Available at SSRN: https://ssrn.com/abstract=3633

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

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Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

IZA Institute of Labor Economics

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