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Labour market regulation, industrial relations, and technological regimes: a tale of comparative advantage

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Bassanini, Andrea
Ernst, Ekkehard

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Abstract

In this paper we present comparative evidence from OECD countries concerning the impact of labour market institutions and regulations on technological specialisation. The interplay between the degree of labour market flexibility, the systems of industrial relations and the knowledge base of different industries determines the viability of different human resource strategies thereby shaping the patterns of comparative advantage. Our empirical results show that countries with coordinated industrial-relations systems and strict employment protection tend to specialise in industries with a cumulative knowledge base. We argue that two mechanisms explain these patterns. The larger the scope for resorting to internal labour markets, the lower the adjustment costs imposed by labour market regulation. Furthermore, employment protection and coordinated industrial-relations regimes, by aligning workers' and firms' objectives, encourage firm-sponsored training as well as the accumulation of firm-specific competencies, allowing firms to fully exploit the potential of the international labour marke.

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Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Couverture Orange) with number 0117.

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Length: 40 pages
Date of creation: 2001
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Handle: RePEc:cpm:cepmap:0117

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Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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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. Martin Falk, 2006. "What drives business Research and Development (R&D) intensity across Organisation for Economic Co-operation and Development (OECD) countries?," Applied Economics, Taylor and Francis Journals, vol. 38(5), pages 533-547, March. [Downloadable!] (restricted)
  2. Koeniger, Winfried, 2003. "Collective Dismissal Cost, Product Market Competition and Innovation," IZA Discussion Papers 888, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Erol Taymaz & Sule Ozler, 2004. "Labor Market Policies and EU Accession: Problems and Prospects for Turkey," ERC Working Papers 0405, ERC - Economic Research Center, Middle East Technical University, revised Mar 2004. [Downloadable!]
  4. Caroli Eve, 2003. "Internal versus External Labour Flexibility: The role of knowledge codification," Research Unit Working Papers 0310, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
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  5. Yılmaz Kılıçaslan & Erol Taymaz, 2008. "Labor market institutions and industrial performance: an evolutionary study," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 477-492, August. [Downloadable!] (restricted)
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