Labour Market Institutions and Employment Thresholds. An International Comparison

This paper deals with the effects to labour market institutions on labour market performance. We analyse the employment threshold (the minimum growth rate necessary to keep employment constant) which is an indicator for the labour intensity of production. We show for 17 OECD countries for the period 1971 to 2002 that the strictness of employment protection, the extent of wage bargaining co-ordination and the tax wedge reduce the labour intensity of production and raise the employment threshold.