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The impact of labour market institutions on income inequality: evidence from OECD countries

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  • Natércia Fortuna
  • António Neto

Abstract

Using data from 35 OECD countries for the 1993–2017 period, this paper shows that stronger Labour Market Institutions (LMI), such as trade unions and bargaining coverage, contribute to a decrease in income inequality measured by the Gini coefficient. Additionally, there seems to be a positive interaction effect between unions and bargaining coverage. The marginal impact of trade unions (bargaining coverage) is enhanced by the presence of high levels of bargaining coverage (trade unions). Notwithstanding, this impact seems to be higher for bargaining coverage. On average, an increase in unions’ density (bargaining coverage) by 1% leads to an estimated decrease in inequality by 0.30% (0.35%), ceteris paribus.

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  • Natércia Fortuna & António Neto, 2021. "The impact of labour market institutions on income inequality: evidence from OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 28(13), pages 1110-1113, July.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:13:p:1110-1113
    DOI: 10.1080/13504851.2020.1803474
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    Cited by:

    1. Caruso Raul & Antonella Biscione, 2022. "Militarization and Income Inequality in European Countries (2000–2017)," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 28(3), pages 267-285, September.

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