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Labour Market Institutions and Labour Market Performance: A Survey of the Literature

Author

Listed:
  • Alfonso Arpaia

    (Directorate-General Economic & Financial Affairs, European Commission)

  • Gilles Mourre

    (Directorate-General Economic & Financial Affairs, European Commission)

Abstract

This paper presents a selective survey of the recent literature on labour market institutions. It describes the different empirical approaches used to explore the nexus between labour market institutions and labour market performance. It stresses that the effect of institutions is complex in both stock and flow models and that it is also crucial to take into account the interactions they generate among themselves and with macroeconomic shocks. While their importance in explaining labour market performances is uncontroversial, there is no full consensus on their actual impact and the precise transmission channels. In addition, rather than taking institutions for granted, a new branch of research attempts to understand them as the result of an endogenous process. The paper also briefly discusses the relationships between the efficiency of the redistributive policies (via taxation) and the type of protection provided (on the job or in the market). Lastly, the paper examines the key issue of efficient policy design both at the macro- and micro-level.

Suggested Citation

  • Alfonso Arpaia & Gilles Mourre, 2005. "Labour Market Institutions and Labour Market Performance: A Survey of the Literature," Labor and Demography 0512011, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpla:0512011
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    Keywords

    Labour market institutions; Endogenous institutions; Labour market reforms;

    JEL classification:

    • J - Labor and Demographic Economics

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