Luca Nunziata

Labor Market Institutions and Wage Inequality

The authors investigate how labor market institutions such as unemployment insurance, unions, firing regulations, and minimum wages have affected the evolution of wage inequality among male workers. Results of estimations using data on institutions in eleven OECD countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998. Factors found to have been negatively associated with male wage inequality are union density, the strictness of employment protection law, unemployment benefit duration, unemployment benefit generosity, and the size of the minimum wage. Over the 26-year period, institutional changes were associated with a 23% reduction in male wage inequality in France, where minimum wages increased and employment protection became stricter, but with an increase of up to 11% in the United States and United Kingdom, where unions became less powerful and (in the United States) minimum wages fell.

Short-Term Contracts Regulations And Dynamic Labour Demand: Theory And Evidence

We present a dynamic labour demand model where we evaluate the impact of employment regulations on permanent and temporary employment. We consider three different kinds of regulations, namely firing costs, hiring costs and a constraint on temporary contracts. These regulations differently affect the size and composition of employment. The theoretical results are interpreted and questioned on the basis of empirical evidence on the employment effects of the regulation reforms that occurred in the major European countries in the period 1983–1999. The empirical analysis is based on a new set of time‐varying indicators on permanent employment protection, fixed‐term contracts and temporary agency work regulations. We find evidence in support of the hypothesis that fixed‐term contracts have been effective stepping‐stones to permanent jobs during the period under observation. On the contrary, flexible temporary agency work regulations seem to induce a substitution of permanent with temporary contracts.

Labour market institutions and the cyclical dynamics of employment

We present an empirical analysis of the effects of labour market institutions on the employment dynamics over the cycle. In the first part of the paper a theoretical framework is provided with particular emphasis on working time regulations. The conclusions of the theory are tested in the second part on a sample of 20 OECD countries observed over the period 1975-1997. The empirical analysis is focused one expansions, contractions and different expansion segments. The claims of the theory are confirmed and a measure of the influence of labour market institutions on the employment responsiveness to the business cycle is provided through simulations.

Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study

An empirical analysis of the impact of labour market structures on the response of inflation to macroeconomic shocks is presented. Results based on a 20 country panel show that if labour market coordination is high, the effect on inflation of movements in unemployment, import prices, tax rates and productivity is dampened, both on impact and dynamically. In contrast, monopoly power in labour supply, measured by the percentage unionisation of the workforce, appears to amplify the response of inflation to its reduced form determinants. These findings are attributed to the behaviour of wages following movements in demand- and supply-side conditions.

Trade union density and inflation performance: evidence from OECD panel data

This paper examines the impact of union membership rates on inflation in OECD countries. A positive effect of union density is estimated, even after controlling for fixed effects and time dummies. Additional institutional characteristics, for example union coordination, employment protection laws and central bank independence, do not affect inflation directly in a panel setting, but do influence the size of the unionization coefficient via interaction terms. The results are robust to controlling for potential common causes such as oil price shocks and the political stance of the government, and to using GMM/IV techniques to handle possible endogeneity biases.

Trade Openness and Inflation Episodes in the OECD

Boschen and Weise (Journal of Money, Credit, and Banking, 2003) model the probability of a large upturn in inflation in the OECD (an inflation start).We extend their work to consider the impact of trade openness on the probability of such an event. The main finding is that increased openness reduces the probability of an inflation start, both directly, and indirectly through restricting the role of general elections in triggering inflation starts.