Unemployment Hysteresis, Wage Determination, and Labor Market Flexibility: The Case of Belgium
AbstractThis paper examines unemployment hysteresis in the Belgian labor market. It estimates models of wage determination using aggregate and firm-level panel data. The conclusions are: (i) the long-term unemployed do not exert a negative impact on wages; and (ii) the incumbent workers, the âinsiders,â exercise market power in wage determination, taking greater account of their own interests than those of the unemployed âoutsiders;â and (iii) the wage indexation system can cause a downward rigidity in real wages. Recent initiatives, including programs aimed at the long-term unemployed and the young, are appropriate in view of the existence of insider power.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 94/150.
Date of creation: 01 Dec 1994
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Other versions of this item:
- Reza Moghadam & Caroline Van Rijckeghem, 1995. "Unemployment Hysteresis, Wage Determination, and Labor Market Flexibility: The Case of Belgium," IMF Staff Papers, Palgrave Macmillan, vol. 42(4), pages 882-893, December.
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
- P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
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