Labor market institutions and industrial performance: an evolutionary study

Kilicaslan Y., TAYMAZ E.

JOURNAL OF EVOLUTIONARY ECONOMICS, cilt.18, ss.477-492, 2008 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 18
  • Basım Tarihi: 2008
  • Doi Numarası: 10.1007/s00191-008-0098-4
  • Dergi Adı: JOURNAL OF EVOLUTIONARY ECONOMICS
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.477-492
  • Anahtar Kelimeler: labor market regulation, flexibility, industrial structure, productivity, PANEL-DATA, FLEXIBILITY, BENEFITS, FIRM
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

This study investigates the impact of labor market institutions on industrial performance from a Schumpeterian perspective. We suggest that labor market institutions play a very important role in the process of creative destruction, because they may create an environment that encourages and enforces innovation, and help to reallocate resources, most importantly labor, through swift elimination of weak performers. We specifically look at the effects of the quantity of labor market regulations and inter-industry wage differentials on labor productivity for a panel of 44 countries for the period 1965-1999. Our findings suggest that those countries that introduce more regulations on conditions of employment and wages achieve higher levels of productivity. Moreover, wage compression raises productivity by reallocating resources to productive activities.