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Does institutional diversity account for pay rules in Germany and Belgium?

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  • Stephan Kampelmann
  • François Rycx

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 ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-042.

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Length: 36 p.
Date of creation: Sep 2011
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Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/98284

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Keywords: Labour market institutions; wage inequality; rules; collective bargaining.;

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