Chapter 46 Labor market institutions and economic performance

Nickell, Stephen; Layard, Richard

doi:10.1016/s1573-4463(99)30037-7

Cited by 770 publications

(750 citation statements)

References 43 publications

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“…More employment protection namely enhances the incentives for a firm to invest in a worker and for a worker to invest in firm-specific human capital. Nickell and Layard (1999) briefly describe this effect. These human capital investments could pay off in terms of higher productivity and higher wages.…”

Section: Theoretical Literaturementioning

confidence: 99%

Better protected, better paid: Evidence on how employment protection affects wages

Wiel¹

2010

Labour Economics

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Better Protected, Better Paid: Evidence on How Employment Protection Affects Wages * This paper empirically establishes the effect of the employer's term of notice on the wage level of employees. The term of notice is defined as the period an employer has to notify workers in advance of their up-coming dismissal. The wages paid during this period are an important element of firing costs and hence employment protection. To find a causal effect, I exploit the exogenous change in the term of notice that resulted from the introduction of a new Dutch law in 1999. Strong evidence is found that a longer 'dormant' term of notice leads to higher wages. In my sample, an additional month of notice increases wages by three percent, ceteris paribus.

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Section: Theoretical Literaturementioning

confidence: 99%

Better protected, better paid: Evidence on how employment protection affects wages

Wiel¹

2010

Labour Economics

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“…where u is the unemployment rate, B captures the unemployment benefit and N w denotes the negotiated wage rate in all identical industries in the economy (see Nickell and Layard (1999) p. 3048-3049 for a further discussion). Assuming a constant benefit replacement ratio…”

Section: The Effects Of Outsourcing On Equilibrium Unemploymentmentioning

confidence: 99%

Equilibrium unemployment with outsourcing under labour market imperfections

Koskela

Stenbacka

2009

Labour Economics

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We study both the various consequences and the incentives of outsourcing. We argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is a result consistent with existing empirical research. Furthermore, we show that a production mode with a higher proportion of outsourcing activity reduces the negotiated wage in the high-wage country with an imperfectly competitive labour market so that outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode and show that stronger labour market imperfections lead to a production mode with a higher share of outsourcing.JEL Classification: E23, E24, J51, J64.

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“…Efficient institutions reduce transactions cost and cost of enforcing contracts, thereby facilitating transactions that, in turn, enhance economic performance. Researchers have demonstrated that factors that characterize the economic environment, such as property rights, legal institutions and labor market institutions affect not only macro variables such as growth (Levine, 1998;Nickell & Layard, 1999;Acemoglu & Johnson, 2005), indeed much more than factors such as geography and trade (Rodrik, et al, 2004), but also micro variables such as firm performance (Dollar et al, 2005;Commander & Svejnar, 2011). In other words, "good" institutional quality is essential for economic growth, and there is a conventional wisdom about the nature of institutions that are desirable.…”

Section: Introductionmentioning

confidence: 99%

Does Institutional Quality Affect Firm Performance? Insights from a Semi-Parametric Approach

et al. 2012

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Using a novel modeling approach, and cross-country firm level data for the textiles industry, we examine the impact of institutional quality on firm performance. Our methodology allows us to estimate the marginal impact of institutional quality on productivity of each firm. Our results bring into question conventional wisdom about the desirable characteristics of market institutions, which is based on empirical evidence about the impact of institutional quality on the average firm. We demonstrate, for example, that once both the direct impact of a change in institutional quality on total factor productivity and the indirect impact through changes in efficiency of use of factor inputs are taken into account, an increase in labor market rigidity may have a positive impact on firm output, at least for some firms. We also demonstrate that there are significant intra-country variations in the marginal impact of institutional quality, such that the characteristics of "winners" and "losers" will have to be taken into account before policy is introduced to change institutional quality in any direction.JEL Classification: C14, D24, K31, O43

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Chapter 46 Labor market institutions and economic performance

Cited by 770 publications

References 43 publications

Better protected, better paid: Evidence on how employment protection affects wages

Better protected, better paid: Evidence on how employment protection affects wages

Equilibrium unemployment with outsourcing under labour market imperfections

Does Institutional Quality Affect Firm Performance? Insights from a Semi-Parametric Approach

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