How Does Labour Market Factors Interacts

Páginas: 4 (864 palabras) Publicado: 3 de enero de 2013
For a long time, the diversity of unemployment rates among countries has fuelled the debate
concerning the role of labour market institutions. A rich literature has developed, depicting
stronglabour legislation, unemployment protection, wage taxation and union action as sources
of rigidity. In general, they are thought to lead to a low equilibrium rate of employment (Nickell
(1997), Siebert(1997) and Layard & Nickell (1999))
1
.
This literature has recently been reinforced by studies on the interactions between institu-
tional arrangements within labour markets. For instance,Nickell, Nunziata, Ochel & Quintini
(2002) show that the harmful e®ect of the gross replacement rate on unemployment is ampli¯ed
when the duration of unemployment bene¯t is long. Similarly, Nickell,Nunziata & Ochel (2005)
argue that the tax wedge increases unemployment all the more when the degree of coordination
in wage bargaining is high. In a similar vein, the literature on institutionalcomplementarities
and substitutability has devoted special attention to the interactions between labour market
institutions (notably employment protection legislation or union density) and product marketregulations
2
.
Labour and product market institutions are not the only factors determining unemployment.
The empirical literature on 'growth and ¯nance' shows that investment and growth arestrongly
related to ¯nancial development
3
. It is also well known that the size of ¯nancial markets, the role
of ¯nancial intermediation, the degree of banking concentration etc. di®er dramaticallyamong
countries (Allen & Gale (1995, 2000)). This has given rise to an abundant literature on the
opposition between bank-based and marked-based ¯nancial systems. This literature investigates
therespective virtues of banks and ¯nancial markets in terms of a reduction of information
asymmetry and corporate ¯nancing. While banks allow to ¯nance small and risky businesses
as well as ¯rms with...
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