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Does Institutional Diversity Account for Pay Rules in Germany and Belgium?

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  • Kampelmann, Stephan

    ()
    (Free University of Brussels)

  • Rycx, Francois

    ()
    (Free University of Brussels)

Abstract

This paper examines the relationship between institutions and the remuneration of different jobs by comparing the German and Belgian labour markets with respect to a typology of institutions (social representations, norms, conventions, legislation, and organisations). The observed institutional differences between the two countries lead to the hypotheses of (I) higher overall pay inequality in Germany; (II) higher pay inequalities between employees and workers in Belgium; and (III) higher (lower) impact of educational credentials (work-post tenure) on earnings in Germany. We provide survey-based empirical evidence supporting hypotheses I and III, but find no evidence for hypothesis II. These results underline the importance of institutional details: although Germany and Belgium belong to the same "variety of capitalism", we provide evidence that small institutional disparities within Continental-European capitalism account for distinct structures of pay.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6010.

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Length: 37 pages
Date of creation: Oct 2011
Date of revision:
Publication status: published in: Socio-Economic Review, 2013, 11 (1), 131-157
Handle: RePEc:iza:izadps:dp6010

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Keywords: rules; wage inequality; labour market institutions; collective bargaining;

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