Labor market deregulation and globalization: empirical evidence from OECD countries |
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Authors: | Niklas Potrafke |
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Institution: | (1) Department of Economics, University of Konstanz, Box 138, 78457 Konstanz, Germany |
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Abstract: | This paper empirically investigates the influence of globalization on various aspects of labor market deregulation. I employ
the data set by Bassanini and Duval (2006) on labor market institutions in OECD countries and the KOF index of globalization. The data set covers 20 OECD countries
in the 1982–2003 period. The results suggest that globalization did neither influence the unemployment replacement rate, the
unemployment benefit length, public expenditures on ALMP, the tax wedge, union density nor overall employment protection.
In contrast, protection of regular employment contracts was diminished when globalization was proceeding rapidly. In fact,
domestic aspects, such as unemployment and government ideology are more important determinants of labor market institutions
and deregulation processes in OECD countries than globalization. For this reason, working conditions of unskilled workers
are not likely to deteriorate and the jobs of unskilled workers are not likely to disappear in the course of globalization.
All this is, of course, not to insinuate that globalization has any benign influence on labor market institutions. |
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