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Labour market institutions and the personal distribution of income in the OECD

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Author Info
Daniele Checchi () (Department of Economics - University of Milan)
Cecilia Garcìa-Peñalosa () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)

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Abstract

A large literature has studied the impact of labour market institutions on wage inequality, but their effect on income inequality has received little attention. In this paper we argue that personal income inequality is a function of the wage differential, the labour share, and the unemployment rate. Labour market institutions then affect income inequality through these three channels and their overall effect is theoretically ambiguous. We use a panel of OECD countries for the period 1960-2000 to examine these effects. We find that greater unionization and a higher degree of wage bargaining coordination have opposite effects on inequality, implying conflicting effects of greater union presence on the distribution of income.

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Paper provided by HAL in its series Working Papers with number halshs-00341005_v1.

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Date of creation: 24 Nov 2008
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Handle: RePEc:hal:wpaper:halshs-00341005_v1

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Related research
Keywords: income inequality; labour share; trade unions;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael F. Förster, 2000. "Trends and Driving Factors in Income Distribution and Poverty in the OECD Area," OECD Labour Market and Social Policy Occasional Papers 42, OECD, Directorate for Employment, Labour and Social Affairs. [Downloadable!]
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  3. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March. [Downloadable!] (restricted)
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  5. François Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2002. "Beyond Oaxaca-Blinder : Accounting for Differences in Household Income Distributions Across Countries," DELTA Working Papers 2002-04, DELTA (Ecole normale supérieure). [Downloadable!]
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  6. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May. [Downloadable!] (restricted)
  8. Philippe Aghion & Eve Caroli & Cecilia Garcia-Penalosa, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December. [Downloadable!] (restricted)
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  9. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March. [Downloadable!] (restricted)
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  10. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-97, July. [Downloadable!] (restricted)
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  11. Daniele Checchi & Claudio Lucifora, 2002. "Unions and labour market institutions in Europe," Economic Policy, CEPR, CES, MSH, vol. 17(35), pages 361-408, October. [Downloadable!] (restricted)
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  12. Daniele Checchi, 2000. "Does educational achievement help to explain income inequality?," Departemental Working Papers 2000-11, Department of Economics University of Milan Italy. [Downloadable!]
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  13. repec:bep:maccon:v:4:y:2004:i:1:p:1161-1161 is not listed on IDEAS
  14. Nickell, Stephen, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer. [Downloadable!] (restricted)
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  18. Bourguignon, F. & Morrisson, C., 1989. "Income Distribution, Development and Foreign Trade: A Cross-Sectional Analysis," DELTA Working Papers 89-05, DELTA (Ecole normale supérieure).
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  19. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June. [Downloadable!] (restricted)
  20. Anand, Sudhir & Kanbur, S. M. R., 1993. "Inequality and development A critique," Journal of Development Economics, Elsevier, vol. 41(1), pages 19-43, June. [Downloadable!] (restricted)
  21. repec:bep:maccon:v:3:y:2003:i:1:p:1103-1103 is not listed on IDEAS
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  22. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January. [Downloadable!] (restricted)
  23. Daron Acemoglu, 2000. "Labor- and Capital- Augmenting Technical Change," NBER Working Papers 7544, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daudey, Emilie & Decreuse, Bruno, 2006. "Higher education, employers’ monopsony power and the labour share in OECD countries," MPRA Paper 3631, University Library of Munich, Germany. [Downloadable!]
  2. Simone Bertoli & Francesco Farina, 2007. "The functional distribution of income: a review of the theoretical literature and of the empirical evidence around its recent pattern in European countries," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 005, Department of Economic Policy, Finance and Development (DEPFID), University of Siena. [Downloadable!]
  3. Hannu Piekkola, 2002. "From Creative destruction to Human Capital Growth: Wage Dispersion Effects in Finland," Discussion Papers 822, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Rémi Bazillier & Nicolas Sirven, 2006. "Les normes fondamentales du travail contribuent-elles à réduire les inégalités ?," Documents de travail 123, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV. [Downloadable!]
    Other versions:
  5. Eric O'N. Fisher & Sharon L. May, 2006. "Relativity in Trade Theory: Towards a Solution to the Mystery of Missing Trade," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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