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Labor Market Institutions and Wage Inequality

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Author Info
Winfried Koeniger
Marco Leonardi
Luca Nunziata

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Abstract

The authors investigate how labor market institutions such as unemployment insurance, unions, firing regulations, and minimum wages have affected the evolution of wage inequality among male workers. Results of estimations using data on institutions in eleven OECD countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998. Factors found to have been negatively associated with male wage inequality are union density, the strictness of employment protection law, unemployment benefit duration, unemployment benefit generosity, and the size of the minimum wage. Over the 26-year period, institutional changes were associated with a 15% reduction in male wage inequality in France, where minimum wages increased and employment protection became stricter, but with an increase of up to 13% in the United States and United Kingdom, where unions became less powerful and (in the United States) minimum wages fell.

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Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 3 (April)
Pages: 340-356
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Handle: RePEc:ilr:articl:v:60:y:2007:i:3:p:340-356

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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.:
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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. Bertola, Giuseppe, 2008. "Labour Markets in EMU - What has Changed and What Needs to Change," CEPR Discussion Papers 7049, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Ioannis Cholezas & Panos Tsakloglou, 2007. "Earnings Inequality in Europe: Structure and Patterns of Inter-Temporal Changes," IZA Discussion Papers 2636, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer, vol. 20(4), pages 833-867, October. [Downloadable!] (restricted)
    Other versions:
  4. Winfried Koeniger & Marco Leonardi, 2006. "Capital Deepening and Wage Differentials: Germany vs. US," IZA Discussion Papers 2065, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Giulia Faggio & Stephen Nickell, 2006. "Patterns of Work Across the OECD," CEP Discussion Papers dp0730, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  6. Robert E. Lipsey & Birgitta Swedenborg, 2007. "Explaining Product Price Differences Across Countries," NBER Working Papers 13239, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Anna M. Falzoni & Alessandra Venturini & Claudia Villosio, 2007. "Skilled and Unskilled Wage Dynamics in Italy in the ‘90s: Changes in the individual characteristics, institutions, trade and technology," LABORatorio R. Revelli Working Papers Series 61, LABORatorio R. Revelli, Centre for Employment Studies. [Downloadable!]
  8. KAWAGUCHI Daiji & MORI Yuko, 2008. "Stable Wage Distribution in Japan, 1982-2002: A Counter Example for SBTC?," Discussion papers 08020, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  9. Jorg, LINGENS & Klaus, WAELDE, 2005. "Pareto-Improving Unemployment Policies," Discussion Papers (ECON - Département des Sciences Economiques) 2005033, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
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  10. Daniel, Kirsten & Siebert, W. Stanley, 2004. "Does Employment Protection Reduce the Demand for Unskilled Labor?," IZA Discussion Papers 1290, Institute for the Study of Labor (IZA). [Downloadable!]
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