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Labor Market Institutions Around the World

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Author Info
Richard B. Freeman

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Abstract

The paper documents the large cross-country differences in labor institutions that make them a candidate explanatory factor for the divergent economic performance of countries and reviews what economists have learned about the effects of these institutions on economic outcomes. It identifies three ways in which institutions affect economic performance: by altering incentives, by facilitating efficient bargaining, and by increasing information, communication, and trust. The evidence shows that labor institutions reduce the dispersion of earnings and income inequality, which alters incentives, but finds equivocal effects on other aggregate outcomes, such as employment and unemployment. Given weaknesses in the cross-country data on which most studies focus, the paper argues for increased use of micro-data, simulations, and experiments to illuminate how labor institutions operate and affect outcomes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13242.

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Date of creation: Jul 2007
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Handle: RePEc:nbr:nberwo:13242

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Find related papers by JEL classification:
J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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References listed on IDEAS
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  1. Freeman, Richard B, 1993. "Labor Markets and Institutions in Economic Development," American Economic Review, American Economic Association, vol. 83(2), pages 403-08, May. [Downloadable!] (restricted)
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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. Koskela, Erkki & Poutvaara, Panu, 2008. "Outsourcing and Labor Taxation in Dual Labor Markets," IZA Discussion Papers 3522, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Haufler, Andreas & Mittermaier, Ferdinand, 2008. "Unionisation triggers tax incentives to attract foreign direct investment," Discussion Papers in Economics 3752, University of Munich, Department of Economics. [Downloadable!]
    Other versions:
  3. Abidoye, Babatunde & Orazem, Peter & Vodopivec, Milan, 2008. "Firing Cost and Firm Size: A Study of Sri Lanka’s Severance Pay System," Staff General Research Papers 12922, Iowa State University, Department of Economics. [Downloadable!]
  4. Claudia M. Buch & Martin Schlotter, 2008. "Regional Origins of Employment Volatility: Evidence from German States," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Bart Hobijn & Aysegül Sahin, 2007. "Firms and flexibility," Staff Reports 311, Federal Reserve Bank of New York. [Downloadable!]
  6. Boeri, Tito & Macis, Mario, 2008. "Do Unemployment Benefits Promote or Hinder Structural Change?," IZA Discussion Papers 3371, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Joshua L. Rosenbloom & William A. Sundstrom, 2009. "Labor-Market Regimes in U.S. Economic History," NBER Working Papers 15055, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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This page was last updated on 2009-11-21.

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