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Labor market institutions around the world

Freeman, Richard B. (2008) Labor market institutions around the world. CEPDP, 844. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282198

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Identification Number: 844

Abstract

This paper documents the large cross-country differences in labor institutions that make them a candidate explanatory factor for the divergent economic performance of countries and reviews what economists have learned about the effects of these institutions on economic outcomes. It identifies three ways in which institutions affect economic performance: by altering incentives, by facilitating efficient bargaining, and by increasing information, communication, and trust. The evidence shows that labor institutions reduce the dispersion of earnings and income inequality, which alters incentives, but finds equivocal effects on other aggregate outcomes, such as employment and unemployment. Given weaknesses in the crosscountry data on which most studies focus, the paper argues for increased use of micro-data, simulations, and experiments to illuminate how labor institutions operate and affect outcomes.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2008 Richard Freeman
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J0 - General > J01 - Labor Economics: General
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 18 Jul 2008 11:49
Last Modified: 07 Feb 2012 17:16
URI: http://eprints.lse.ac.uk/id/eprint/19647

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