Labour-market institutions, (un)employment,wages, and growth: theory and data |
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Authors: | Oscar Afonso Ana Maria Bandeira Manuela Magalhães |
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Affiliation: | 1. Universidade do Porto, Faculdade de Economia, Porto, Portugal, CEFAGE-UBI and OBEGEF;2. Polytechnic Institute of Porto, Porto Accounting and Business School, Porto, Portugal, CEOS.PP and CEPESE;3. University of Alicante, Department of Economics, Alicante, Spain, CEFAGE-UBI and OBEGEF |
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Abstract: | We analyse the implications of labour-market institutions on wage inequality in favour of skilled labour, on relative unemployment of unskilled labour, and on the economic growth rate in two clusters resulting from 27 OECD countries: Cluster 1, closely related with the Anglo-Saxon model, and Cluster 2, dominated by the Continental-European model. By linking the unskilled wage to the skilled one in Cluster 2, due to the indexation of social benefits to per-capita income, we accommodate the observed paths of the three variables in both clusters between 1991 and 2008: Cluster 1 presents a higher wage inequality in favour of skilled labour, a lower unemployment of the unskilled labour, and a better economic growth rate. |
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Keywords: | Labour-market institutions (un)employment wage inequality endogenous economic growth calibration |
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