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Institutions and Wage Determination: a Multi-country Approach

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Author Info
Luca Nunziata

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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. Copyright 2005 Blackwell Publishing Ltd.

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.

Volume (Year): 67 (2005)
Issue (Month): 4 (08)
Pages: 435-466
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Handle: RePEc:bla:obuest:v:67:y:2005:i:4:p:435-466

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Baltagi, Badi H. & Li, Qi, 1995. "Testing AR(1) against MA(1) disturbances in an error component model," Journal of Econometrics, Elsevier, vol. 68(1), pages 133-151, July. [Downloadable!] (restricted)
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  3. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August. [Downloadable!] (restricted)
  4. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July. [Downloadable!] (restricted)
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  5. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR, CES, MSH, vol. 15(30), pages 47-104, 04. [Downloadable!] (restricted)
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  6. Belot, M.V.K. & Ours, J. C. van, 2000. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labour market reforms?," Discussion Paper 40, Tilburg University, Center for Economic Research. [Downloadable!]
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  7. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October. [Downloadable!] (restricted)
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    Other versions:
  20. Nickell, Stephen, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Luca Nunziata, 2002. "Unemployment, Labour Market Institutions and Shocks," Economics Papers 2002-W16, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
  2. Carsten Ochsen, 2005. "Labour Market Institutions and Unemployment Revisited," Thuenen-Series of Applied Economic Theory 49, University of Rostock, Institute of Economics, Germany. [Downloadable!]
  3. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memoranda 224, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  4. Morawski, Leszek & Myck, Michal, 2008. "'Klin'-ing Up: Effects of Polish Tax Reforms on Those In and on Those Out," IZA Discussion Papers 3746, Institute for the Study of Labor (IZA). [Downloadable!]
  5. António Afonso & Pedro Gomes, 2008. "Interactions between Private and Public Sector Wages," Working Papers 2008/55, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  6. Sebastian Weber, 2006. "Labor Market Structures, Trade and their Effect on Unemployment: A Theoretical Analysis and Empirical Investigation," HEI Working Papers 22-2006, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  7. Hielke Buddelmeyer & Gilles Mourre & Melanie Ward, 2008. "Why do Europeans work part-time? A cross-country Panel Analysis," Working Paper Series 872, European Central Bank. [Downloadable!]
  8. Roger Bjørnstad and Kjartan Øren Kalstad, 2006. "Increased Price Markup from Union Coordination. OECD Panel Evidence," Discussion Papers 470, Research Department of Statistics Norway. [Downloadable!]
  9. Gustavo Gonzaga & Beatriz Muriel & Cristina Terra, 2005. "Abertura Comercial, Desigualdade Salarial E Sindicalização," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 073, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  10. Bjørnstad, Roger & Nymoen, Ragnar, 2008. "The New Keynesian Phillips Curve Tested on OECD Panel Data," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(23), pages 1-18. [Downloadable!]
    Other versions:
  11. Koeniger, Winfried & Leonardi, Marco & Nunziata, Luca, 2004. "Labour Market Institutions and Wage Inequality," IZA Discussion Papers 1291, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  12. Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era, And After," Economics Series Working Papers 130, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  13. Buddelmeyer, Hielke & Mourre, Gilles & Ward, Melanie, 2004. "The Determinants of Part-Time Work in EU Countries: Empirical Investigations with Macro-Panel Data," IZA Discussion Papers 1361, Institute for the Study of Labor (IZA). [Downloadable!]
  14. Holden, Steinar & Wulfsberg, Fredrik, 2007. "Are real wages rigid downwards?," Memorandum 07/2007, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  15. Christopher Bowdler & Luca Nunziata, 2005. "Trade union density and inflation performance: evidence from OECD panel data," "Marco Fanno" Working Papers 0009, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
    Other versions:
  16. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Discussion Papers 122, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  17. Nunziata, Luca & Bowdler, Christopher, 2005. "Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study," IZA Discussion Papers 1510, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  18. Dominique Demougin & Carsten Helm, 2009. "Incentive Contracts and Efficient Unemployment Benefits," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  19. Xiujian Chen & Shu Lin & W. Robert Reed, 2006. "Another Look at what to do with Time-series Cross-section Data," Working Papers in Economics 06/04, University of Canterbury, Department of Economics. [Downloadable!]
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  20. Jakob de Haan & Jan-Egbert Sturm & Bjorn Volkerink, 2003. "How to Measure the Tax Burden on Labour at the Macro-Level?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  21. Roger Bjørnstad and Ragnar Nymoen, 2006. "Will it float? The New Keynesian Phillips curve tested on OECD panel data," Discussion Papers 463, Research Department of Statistics Norway. [Downloadable!]
  22. Jennifer L. Castle & David F. Hendry, 2008. "The Long-Run Determinants of UK Wages, 1860-2004," Economics Series Working Papers 409, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  23. Christopher Bowdler & Luca Nunziata, 2004. "Labour Markets Institutions and Inflation Performance: Evidence from OECD panel data," Money Macro and Finance (MMF) Research Group Conference 2004 29, Money Macro and Finance Research Group. [Downloadable!]
  24. Hedvig Horváth & Zoltán Szalai, 2008. "Labour market institutions in Hungary with a focus on wage and employment flexibility," MNB Occasional Papers 2008/77, Magyar Nemzeti Bank (The Central Bank of Hungary). [Downloadable!]
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