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Labour Market Institutions and the Personal Distribution of Income in the OECD
Author(s) -
CHECCHI DANIELE,
GARCÍAPEÑALOSA CECILIA
Publication year - 2010
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2009.00776.x
Subject(s) - economics , labour economics , unemployment , inequality , economic inequality , distribution (mathematics) , income distribution , wage , personal income , collective bargaining , differential (mechanical device) , income inequality metrics , wage bargaining , demographic economics , macroeconomics , engineering , aerospace engineering , mathematical analysis , mathematics
A large literature has studied the impact of labour market institutions on wage inequality, but their effect on income inequality has received little attention. This paper argues that personal income inequality depends on the wage differential, the labour share and the unemployment rate. Labour market institutions affect income inequality through these three channels, and their overall effect is theoretically ambiguous. We use a panel of OECD countries for the period 1960–2000 to examine these effects. We find that greater unionization and greater wage bargaining coordination have opposite effects on inequality, implying conflicting effects of greater union presence on income inequality.