Scandinavian Working Papers in Economics
Research Papers in Economics,
Stockholm University, Department of Economics
No 2001:12: On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance
Jonas Agell ()
Additional contact information
Jonas Agell: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Abstract: What determines the structure of labour market institutions? I argue that
common explanations based on rent seeking are incomplete. Unions, job
protection, and egalitarian pay structures may have as much to do with social
insurance of otherwise uninsurable risks as with rent seeking. In support of
this more benign complementary hypothesis the paper presents a range of
historical, theoretical, and cross-country evidence. The social
insurance perspective changes substantially the positive analysis of the
future of European labour market institutions. It is not clear that
globalisation and the “new economy” will force countries to make their labour
markets more flexible. These phenomena will probably increase the efficiency
costs of existing institutions, but they may also make voters more willing to
pay a high premium to preserve institutions that provide insurance.
Keywords: Labour market institutions; comparative historical evidence; Sweden; Massachusetts; rent seeking; social insurance; union models; cross-country regressions; openness; linguistic fractionalisation
31 pages, November 25, 2001
Full text files
wp01_12.pdf
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