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

  • Stephan Kampelmann
  • François Rycx

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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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/98327/1/11-12%20DULBEA%20WP%20Kampelmann%20and%20Rycx.pdf
File Function: 11-12 DULBEA WP Kampelmann and Rycx
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Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 11-12.

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Length: 46 p.
Date of creation: 29 Sep 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:dul:wpaper:2013/98327
Contact details of provider: Web page: http://difusion.ulb.ac.be

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  1. Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 59-94 National Bureau of Economic Research, Inc.
  2. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
  3. Fuss, Catherine, 2009. "What is the most flexible component of wage bill adjustment? Evidence from Belgium," Labour Economics, Elsevier, vol. 16(3), pages 320-329, June.
  4. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
  5. Orsetta Causa & Sophie Dantan & Åsa Johansson, 2009. "Intergenerational Social Mobility in European OECD Countries," OECD Economics Department Working Papers 709, OECD Publishing.
  6. Philip Du Caju & François Ryckx & Ilan Tojerow, 2009. "Inter-industry wage differentials : How much does rent sharing matter ?," Working Paper Research 180, National Bank of Belgium.
  7. Marsden, David, 1999. "A Theory of Employment Systems: Micro-Foundations of Societal Diversity," OUP Catalogue, Oxford University Press, number 9780198294221, March.
  8. Stephan Kampelmann, 2009. "Inequality Measures as Conventions: New Interpretations of a Classic Operationalization Problem," ULB Institutional Repository 2013/109410, ULB -- Universite Libre de Bruxelles.
  9. Blau, Francine D. & Kahn, Lawrence M., 1999. "Institutions and laws in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 25, pages 1399-1461 Elsevier.
  10. Du Caju, Philip & Kátay, Gábor & Lamo, Ana & Nicolitsas, Daphne & Poelhekke, Steven, 2010. "Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?," Working Paper Series 1182, European Central Bank.
  11. Benito, Andrew, 2000. " Inter-industry Wage Differentials in Great Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(0), pages 727-46, Special I.
  12. Michael Rusinek & François Rycx, 2013. "Rent-Sharing under Different Bargaining Regimes: Evidence from Linked Employer–Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 51(1), pages 28-58, 03.
  13. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  14. Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," IZA Discussion Papers 2100, Institute for the Study of Labor (IZA).
  15. Jean Verly, 2003. "La décentralisation des relations collectives de travail," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 23-34.
  16. Masahiko Aoki, 2013. "Endogenizing institutions and institutional changes," Chapters, in: Comparative Institutional Analysis, chapter 16, pages 267-297 Edward Elgar.
  17. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  18. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  19. Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 41, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
  20. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  21. Brunello, Giorgio & Comi, Simona, 2004. "Education and earnings growth: evidence from 11 European countries," Economics of Education Review, Elsevier, vol. 23(1), pages 75-83, February.
  22. Iga Magda & François Rycx & Ilan Tojerow & Daphné Valsamis, 2011. "Wage differentials across sectors in Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 749-769, October.
  23. Joachim Frick & Kristina Krell, 2011. "Einkommensmessungen in Haushaltspanelstudien für Deutschland: Ein Vergleich von EU-SILC und SOEP," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 5(3), pages 221-248, December.
  24. repec:rwi:dpaper:0041 is not listed on IDEAS
  25. Gibbons, Robert & Katz, Lawrence F, 1992. "Does Unmeasured Ability Explain Inter-industry Wage Differentials?," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 515-35, July.
  26. Richard B. Freeman, 1996. "Labor market institutions and earnings inequality," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 157-172.
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