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Labour Market Institutions and their Effect on Labour Market Performance in the New EU Member Countries

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  • Kamila Fialová
  • Ondrej Schneider

Abstract

This article focuses on the role of labour market institutions in explaining different labour market developments in European countries, with a special attention to the new European Union member countries. This may allow us to analyse effects of various institutional setups and of their changes on major labour market indicators. We aim at complementing several studies from the late 1990’s by using more recent data that allow us to compare institutional setups from the mid 1990’s and early 2000’s both in “old” and “new” EU member states. We estimate effects of labour market institutions on various performance indicators (unemployment, long-term unemployment, employment, activity rate). Our results confirm that high taxes increase unemployment, while active labour market policies tend to reduce it. We also show that stricter employment protection, higher taxes and larger economic burden represented by the minimum wage decrease employment and activity rate. Moreover, statistical tests indicate that there is a difference in the institutional effects between “old” and “new” EU members.

Suggested Citation

  • Kamila Fialová & Ondrej Schneider, 2008. "Labour Market Institutions and their Effect on Labour Market Performance in the New EU Member Countries," CESifo Working Paper Series 2421, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2421
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    References listed on IDEAS

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    Cited by:

    1. Hazans, Mihails, 2011. "What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth," Policy Research Working Paper Series 5917, The World Bank.
    2. Cristiano Perugini & Ekaterina Selezneva, 2015. "Labour market institutions, crisis and gender earnings gap in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(3), pages 517-564, July.
    3. Randolph L. Bruno & Riccardo Rovelli, 2010. "Labour Market Policies and Outcomes in the Enlarged EU," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 661-685, June.
    4. Dieppe, Alistair & Mourinho Félix, Ricardo & Marchiori, Luca & Grech, Owen & Albani, Maria & Kulikov, Dmitry & Papadopoulou, Niki & Sideris, Dimitris & Irac, Delphine & Gordo Mora, Esther & Vogel, Edg, 2015. "Public debt, population ageing and medium-term growth," Occasional Paper Series 165, European Central Bank.
    5. Kamila Fialová & Ondrej Schneider, 2014. "Labor Market Institutions and Their Impact on Shadow Economies in Europe," Review of Economics and Institutions, Università di Perugia, vol. 5(1).
    6. Kamila Fialová & Martina Mysíková, 2009. "The Minimum Wage: Labor Market Consequences in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(3), pages 255-274, August.
    7. Kamila Fialová, 2010. "Labor Institutions and their Impact on Shadow Economies in Europe," Working Papers IES 2010/29, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2010.
    8. Alfonso Arpaia & Gilles Mourre, 2012. "Institutions And Performance In European Labour Markets: Taking A Fresh Look At Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 1-41, February.
    9. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    10. Fatih Macit, 2012. "Labor Market Institutions and Labor Productivity Growth," Economic Research Guardian, Weissberg Publishing, vol. 2(1), pages 121-128, May.
    11. Lehmann, Hartmut & Muravyev, Alexander, 2009. "How Important Are Labor Market Institutions for Labor Market Performance in Transition Countries?," IZA Discussion Papers 4673, Institute for the Study of Labor (IZA).
    12. repec:ecb:ecbops:2014165 is not listed on IDEAS
    13. Lehmann, Hartmut & Muravyev, Alexander, 2011. "Labor Markets and Labor Market Institutions in Transition Economies," IZA Discussion Papers 5905, Institute for the Study of Labor (IZA).
    14. H. Lehmann & A. Muravyev, 2010. "Labor market institutions and labor market performance: what can we learn from transition countries?," Working Papers 714, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Per Skedinger, 2010. "Employment Protection Legislation," Books, Edward Elgar Publishing, number 13686, December.
    16. Beata Farkas, 2011. "The Central and Eastern European model of capitalism," Post-Communist Economies, Taylor & Francis Journals, vol. 23(1), pages 15-34.
    17. Indermit Gill & Johannes Koettl & Truman Packard, 2013. "Full employment: a distant dream for Europe," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-34, December.
    18. Edoardo Di Porto & Leandro Elia & Cristina Tealdi, 2013. "The "emersion" effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy," Working Papers 2/2013, IMT Institute for Advanced Studies Lucca, revised Jun 2013.
    19. Bergljot B Barkbu & Jesmin Rahman & Rodrigo O. Valdes, 2012. "Fostering Growth in Europe Now," IMF Staff Discussion Notes 12/07, International Monetary Fund.
    20. Emilie Jašová & Božena Kadeřábková & Klára Čermáková & Pavel Procházka, 2016. "Působení institucionálních faktorů na strukturální a cyklickou nezaměstnanost v zemích Visegrádské skupiny
      [Influence of Institutional Factors on Structural and Cyclical Unemployment in the Countri
      ," Politická ekonomie, University of Economics, Prague, vol. 2016(1), pages 34-50.

    More about this item

    Keywords

    labour market; unemployment; European Union; labour market institutions;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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