Abstract
This thesis consists of four independent essays. Firstly, the thesis examines the combined influence of labour market institutions, fiscal imbalances and credit constraints on unemployment. Using a sample of 20 OECD countries from 1970 to 2013 and accounting for cross-sectional and temporal dependence in the regressions’ disturbances, results suggest that unemployment exhibits high persistence. It is also closely associated with business cycle fluctuations, albeit mostly in economies under adjustment programmes (Spain, Ireland, Italy and Portugal), perhaps underscoring their higher vulnerability and low speed of adjustment to changes in macroeconomic dynamics. Evidence on the association between labour and product market institutions and unemployment remains inconclusive. Tight labour market rules might reduce employers’ hiring propensity. However, it is shown that some employment protection is favoured by employers who invest in longer tenure and firm-specific human capital. Ambiguous ...
This thesis consists of four independent essays. Firstly, the thesis examines the combined influence of labour market institutions, fiscal imbalances and credit constraints on unemployment. Using a sample of 20 OECD countries from 1970 to 2013 and accounting for cross-sectional and temporal dependence in the regressions’ disturbances, results suggest that unemployment exhibits high persistence. It is also closely associated with business cycle fluctuations, albeit mostly in economies under adjustment programmes (Spain, Ireland, Italy and Portugal), perhaps underscoring their higher vulnerability and low speed of adjustment to changes in macroeconomic dynamics. Evidence on the association between labour and product market institutions and unemployment remains inconclusive. Tight labour market rules might reduce employers’ hiring propensity. However, it is shown that some employment protection is favoured by employers who invest in longer tenure and firm-specific human capital. Ambiguous findings are also reported for the impact of product market regulation on unemployment. While there is evidence that rigid product markets lead to an increase in unemployment, results also show that unemployment may rise if productivity gains from deregulation policies are not matched by at least a proportional increase in aggregate demand. Unlike the pre-crisis period, high corporatism among the social partners is found to significantly relieve unemployment pressures during the crisis years. The effect of large fiscal consolidation episodes on unemployment is consistently positive and significant, especially during the crisis period (2008-13) and in countries with strict employment protection regulation. High growth rates of GDP that reflect economic activity rebound, may partly neutralize the positive and significant impact of fiscal consolidation on unemployment. Secondly, the thesis examines the macroeconomic impact of collective bargaining structures in a context of varying intersectoral heterogeneity in productivity growth among the exposed and sheltered sectors of the economy. Using a sample of 19 OECD countries from 1990 to 2014 and an Arellano-Bover/Blundell-Bond linear dynamic GMM estimator along with a bootstrap-based bias correction fixed effects estimator for dynamic panels, results show a dampening impact of uncoordinated, pattern and centralized bargaining structures on unemployment. Using the system GMM estimator, unemployment decreases somewhat monotonically with the degree of coordination of wage bargaining. The unemployment dampening impact is stronger under centralized bargaining and even more so under pattern bargaining, compared to the decentralized bargaining regimes. A similar pattern is reported using the bootstrap-based bias correction for fixed effects estimator, where the unemployment dampening impact of uncoordinated bargaining is yet relatively more pronounced. However, strong domestic demand is a key precondition for such a favourable effect to materialize. Concerning labour cost growth, it is shown that solely uncoordinated and centralized bargaining structures produce labour cost restraint under the Arellano-Bover/Blundell-Bond system GMM estimator. Results consistently point to a positive association between uncoordinated bargaining and trade balances. Still, there is no one best way to favourable macroeconomic outcomes. Whereas the impact of decentralized bargaining on wage dispersion is not empirically verified, intermediate and centralized bargaining structures are effectively associated with lower labour earnings inequality. Turning to interaction effects, the negative association between intersectoral productivity differentials and fiscal balances is accentuated when the gap in productivity growth among tradables and non-tradables widens under uncoordinated bargaining. Likewise, there is evidence that industry and pattern bargaining moderate labour cost growth as productivity differentials among the exposed and sheltered sectors of the economy widen. Thirdly, the thesis investigates the structure and determinants of inter-industry wage differentials in Greece, along with the role of the rent-sharing and unobserved heterogeneity hypotheses, employing restricted least squares and quantile regression techniques with cluster robust standard errors at the firm level. To this end, a unique dataset, the European Union Structure of Earnings Survey (SES), is utilized. Data refer to 2010 when the first elements of the economic adjustment programme to deal with the chronic deficiencies of the Greek economy and restore sustainable public finances, competitiveness and set the foundation for long-term growth were beginning to be implemented. Results point to high wage dispersion across industries at the mean of the conditional wage distribution, even after controlling for personal and workplace characteristics. The best-paying industries are the manufacturing of coke and refined petroleum products, water and air transportation activities, manufacturing of tobacco products and financial activities, electricity/gas supply, water collection, manufacturing of pharmaceuticals, telecommunications as well as programming and broadcasting activities. The lowest-paying industries comprise office administrative, office support and other business support activities, employment activities, security and investigation and other personal service activities, information service and food and beverage service activities. However, evidence for the unobserved heterogeneity hypothesis is rather scant. Therefore, there is room for efficiency wage or rent-sharing theories in accounting for a large part of inter-industry wage differentials, tentatively implying that firm heterogeneity in the ability to pay matters more than employee unobservable attributes in the wage determination process.Fourthly, the thesis investigates the intergenerational transmission of female labour force participation and the intergenerational transmission of educational outcomes in Greece, using logit regressions techniques for binary response models fit by maximum likelihood with robust standard errors. To conduct this study, we pioneer in utilizing a unique dataset, the European Union Statistics on Income and Living Conditions (EU-SILC) for Greece. Data refer to 2011 when the first elements of the economic adjustment programme were being put into place. Most importantly, the EU-SILC 2011 wave is the latest one to include an ad hoc module on the intergenerational transmission of disadvantages. Results provide evidence of high intergenerational persistence in labour force participation and educational attainment. Concerning the former, a married woman’s labour force participation decision is found to be related to the mother of her husband’s and her own mother’s participation in the past, and even more strongly related to her own level of educational achievement along with the number of children in the household. A wife’s upper level of educational attainment comes out overwhelmingly as the most important determinant of her labour force participation decision. The labour force participation of the mother of the husband is more important than that of the woman’s own mother, indicating a strong transmission of the husband’s cultural model. Regarding educational attainment, parental educational background, and especially maternal, is identified as a key determinant of women’s high level of educational achievement. Therefore, there is room for the intergenerational transmission of gender role attitudes in accounting for a wide range of socioeconomic outcomes such as female labour force participation and educational attainment, with far-reaching repercussions on the generations to come. Policy interventions that increase female labour force participation and enhance educational outcomes, especially in financially distressed countries in a severe crisis, like Greece, would also benefit subsequent generations through the intergenerational transmission of the participation choice and educational attainment potentially leading to higher output growth.
show more
