Institutions and Wage Determination: A Multi-Country Approach

32 Pages Posted: 3 Aug 2005

See all articles by L. Nunziata

L. Nunziata

University of Padua - Department of Economics; IZA Institute of Labor Economics

Abstract

We present an empirical analysis of the determinants of labour cost in OECD countries, with particular reference to the impact of labour market institutions from 1960 to 1994. We show that labour market regulations can explain a large part of the labour cost rise in OECD countries in the last few decades once we control for productivity. These results are consistent with the findings of a companion paper [Nickell, Nunziata and Ochel (2005)Economic Journal, Vol. 115, pp. 1-27] where the effects of institutions on unemployment are examined. We present also a discussion of the econometric issues related to the estimation of a macro pooled model like ours. We focus, among other things, on the hypothesis of poolability and on the cointegration properties of the model. The explanatory power of the model is finally tested by means of a series of country by country dynamic simulations.

Suggested Citation

Nunziata, Luca, Institutions and Wage Determination: A Multi-Country Approach. Oxford Bulletin of Economics & Statistics, Vol. 67, No. 4, pp. 435-466, August 2005. Available at SSRN: https://ssrn.com/abstract=764827

Luca Nunziata (Contact Author)

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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