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Employment Protection And The Non‐Linear Relationship Between The Wage‐Productivity Gap And Unemployment

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  • Antonia López‐Villavicencio
  • José Ignacio Silva

Abstract

This paper studies the relationship between the wage‐productivity gap and the unemployment rate in OECD countries between 1985 and 2007. In particular, we investigate whether differences in the employment protection across countries affect the link between these two variables. We show that the elasticity of unemployment with respect to the wage‐productivity gap is non‐linear and that it switches from a positive to a negative value with stricter employment legislation. From a theoretical point of view, we argue that this result is related to a set of labor market reforms introduced in many OECD countries, which affected the relative strictness of institutions.
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  • Antonia López‐Villavicencio & José Ignacio Silva, 2011. "Employment Protection And The Non‐Linear Relationship Between The Wage‐Productivity Gap And Unemployment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 200-220, May.
    • Handle: RePEc:bla:scotjp:v:58:y:2011:i:2:p:200-220
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    2. Kosta Josifidis & Radmila Dragutinović Mitrović & Novica Supić, 2016. "Redistribution and Transmission Mechanisms of Income Inequality – Panel Analysis of the Affluent OECD Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(2), pages 231-258, April.
    3. Jurica Bosna, 2018. "Estimation Of The Great Decoupling On The Example Of Croatia, As Compared With Germany And Poland," Poslovna izvrsnost-Business Excellence, University of Zagreb Faculty of Economics & Business, vol. 12(1), pages 33-52.
    4. Alina Stundziene & Asta Baliute, 2022. "Personnel Costs and Labour Productivity: The Case of European Manufacturing Industry," Economies, MDPI, vol. 10(2), pages 1-17, January.

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