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Direct and Indirect Effects of Corporatism on Economic Growth

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  • Emma Galli
  • Fabio Padovano

Abstract

We investigate whether corporatist governance negatively affects growth: a) directly through higher transaction costs involved in the policy decision making process; b) indirectly, yielding growth retarding policy decisions. We construct a more accurate data set for 18 OECD countries in the 1960-1993 interval and improve the specification and estimation of the model. We find that corporatist governance and left wing governments do not directly reduce growth, but there are a robust correlations between growth, union pervasiveness and other policy regressors. On average, corporatist (decentralized) countries adopt growth retarding (enhancing) policies, consistently with the hypothesis that corporatism exerts an indirect negative effect on growth.

Suggested Citation

  • Emma Galli & Fabio Padovano, 2001. "Direct and Indirect Effects of Corporatism on Economic Growth," Rivista di Politica Economica, SIPI Spa, vol. 91(5), pages 5-32, June.
  • Handle: RePEc:rpo:ripoec:v:91:y:2001:i:5:p:5-32
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    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • P41 - Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform

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