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Do Interactions between Finance and Labor Market Institutions Affect Wage Distribution?

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Abstract

This article analyzes the linkages between financial liberalization, labor market institutions and wage inequality for 17 OECD countries over the 1989 to 2005 period. With the help of a fixed effect model with an interacted term, one crucial contribution of this article is to analyze the interacted impact of labor market institutions (i.e., workers' bargaining power and employment protection legislation) on the one hand and financial liberalization on the other hand on wage distribution. Our results indicate that changes in workers' bargaining power and in employment protection affect wage distribution (p9/p1 ratio). Estimates of the marginal effects show that by increasing labor markers regulation (i.e., reinforcing workers' bargaining power and increasing employment protection legislation) one also weakens the impact of financial liberalization on the increase in wage inequality

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  • Thibault Darcillon, 2012. "Do Interactions between Finance and Labor Market Institutions Affect Wage Distribution?," Documents de travail du Centre d'Economie de la Sorbonne 12089, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:12089
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    1. Thibault Darcillon, 2013. "What Causes Labor-Market Volatility? The Role of Finance and Welfare State Institutions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881198, HAL.
    2. Dünhaupt, Petra, 2014. "An empirical assessment of the contribution of financialization and corporate governance to the rise in income inequality," IPE Working Papers 41/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Margarita Carvalho & João Cerejeira, 2019. "Financialization, Corporate Governance and Employee Pay: A Firm Level Analysis," NIPE Working Papers 08/2019, NIPE - Universidade do Minho.

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    More about this item

    Keywords

    Wage inequality; financial liberalization; corporate governance; employment protection; political economy;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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