Institutions and Wage Determination: A Multi-Country Approach
AbstractWe 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. The main contribution of the paper is to show that labour market regulations can explain a large part of labour cost rise in OECD countries in the last decades once we control for productivity. These results are consistent with the findings of a companion paper (Nickell et al., 2001) where the effects of institutions on unemployment are examined. The model controls for macroeconomic shocks, and include the possibility of interactions among institutions. We present also a discussion of the potential problems encountered when estimating a macro pooled model like ours. We focus, among other things, on the hypothesis of poolability and on the cointegration properties of the model, suggesting a two way fixed effects specification in GLS form that corrects for heteroskedasticity and serial correlation. The explanatory power of the model is finally tested by means of a series of by country dynamic simulations.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 433.
Date of creation: 2002
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Other versions of this item:
- Luca Nunziata, 2005. "Institutions and Wage Determination: a Multi-country Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(4), pages 435-466, 08.
- Luca Nunziata, 2001. "Institutions and Wage Determination: a Multi-Country Approach," Economics Series Working Papers 2001-W29, University of Oxford, Department of Economics.
- Luca Nunziata, 2001. "Institutions and Wage Determination: a Multi-Country Approach," Economics Papers 2001-W29, Economics Group, Nuffield College, University of Oxford.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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