how to cite this article
share this article


  • citations in SCIndeks: 0
  • citations in CrossRef:0
  • citations in Google Scholar:[]
  • visits in previous 30 days:6
  • full-text downloads in 30 days:0


article: 1 from 4  
Back back to result list
2020, vol. 67, iss. 3, pp. 291-308
Employment protection legislation and labour income shares in Europe
aUniversity of Cambridge, Department of Land Economics, Cambridge, UK
bUniversity of the Basque Country UPV/EHU, Department of Applied Economics V, Bilbao, Spain,,
This paper has been funded by the Spanish Ministry of Economics and Competitiveness (Project Reference: RTI2018-099225-B-I00)

Keywords: Employment protection legislation; Labour markets; Labour income share; Income distribution
The paper analyses the determinant elements of the evolution of labour income share, measured by the size of compensation of employees as a percentage of GDP in twenty European economies. In doing so, special attention is paid to the impact of employment protection legislation. Our study's results show that the evolution of labour income share is explained by the economic growth, the growth of employment and unemployment rates, and the growth of real wages. Regarding employment protection, only employment protection for temporary workers matters. Our results shows that stricter provisions on the use of fixed-term and temporary agency contracts have a positive impact on the growth of the labour shares.
Adams, Z., Bishop, L., Deakin, S., Fenwick, C., Martinsson, G.S., Rusconi, G. (2019) The economic significance of laws relating to employment protection and different forms of employment: Analysis of a panel of 117 countries, 1990-2013. International Labour Review, 158(1): 1-35
Albert, J., Gómez-Fernández, N., Ochando, C. (2019) Effects of unconventional monetary policy on income and wealth distribution: Evidence from United States and Eurozone. Panoeconomicus, vol. 66, br. 5, str. 535-558
Alvaredo, F., Chancel, L., Piketty, T., Saez, E., Zucman, G. (2017) Global Inequality Dynamics: New Findings from WID World. American Economic Review Papers & Proceedings, 107(5): 404-409
Arestis, P., Gonzalez-Martinez, A. (2016) Income inequality: Implications and relevant economic policies. Panoeconomicus, vol. 63, br. 1, str. 1-24
Arestis, P., Ferreiro, J., Gómez, C. (2020) Quality of Employment and Employment Protection: Effects of Employment Protection on Temporary and Permanent Employment. Structural Change and Economic Dynamics, 53: 180-188
Arestis, P., Baltar, T.C. (2017) Income distribution and economic growth: A critical approach. Panoeconomicus, vol. 64, br. 2, str. 125-138
Atkinson, A.B. (2015) Inequality: What Can Be Done?. Cambridge, MA: Harvard University Press
Avdagic, S., Salardi, P. (2013) Tenuous link: Labour market institutions and unemployment in advanced and new market economies. Socio-Economic Review, 11(4): 739-769
Avdagic, S. (2015) Does Deregulation Work? Reassessing the Unemployment Effects of Employment Protection. British Journal of Industrial Relations, 53(1): 6-26
Baker, D., Glyn, A., Howell, D.R., Schmitt, J. (2005) Labor Market Institutions and Unemployment: Assessment of the Cross-Country Evidence. in: Howell David R. [ed.] Fighting Unemployment: The Limits of Free Market Orthodoxy, Oxford: Oxford University Press, 72-118
Bárcena-Martín, E., Martín-Fuentes, N., Pérez-Moreno, S. (2019) Effects of monetary policy shocks on income mobility in the Euro area countries. Panoeconomicus, vol. 66, br. 3, str. 307-324
Bellani, D., Bosio, G. (2019) Knockin' on heaven's door? Reframing the debate on temporary employment and wages: Evidence from Europe. Socio-Economic Review, 0(0): 1-39
Bertola, G. (2017) European unemployment revisited: Shocks, institutions, integration. Research in Economics, 71(3): 588-612
Boeri, T., Cahuc, P., Zylberberg, A. (2015) The Costs of Flexibility-Enhancing Structural Reforms: A Literature Review. OECD Economics Department, Working Paper 1264
Brancaccio, E., Garbellini, N., Giammetti, R. (2018) Structural labour market reforms, GDP growth and the functional distribution of income. Structural Change and Economic Dynamics, 44(C): 34-45
Buchele, R., Christiansen, J. (1998) Do employment and income security cause unemployment? A comparative study of the US and the E-4. Cambridge Journal of Economics, 22(1): 117-136
Carlos, M., Afonso, Ó. (2018) Intra-country wage inequality in the OECD countries. Panoeconomicus, vol. 65, br. 3, str. 339-362
Chen, S., Desiderio, S. (2019) Job Duration and Inequality. Kiel Institute for the World Economy, Discussion Paper 44
Ciminelli, G., Duval, R., Furceri, D. (2018) Employment Protection Deregulation and Labor Shares in Advanced Economies. IMF Working Papers, 18(186): 1-1
Damiani, M., Pompei, F., Ricci, A. (2016) Temporary employment protection and productivity growth in EU economies. International Labour Review, 155(4): 587-622
Dosi, G., Pereira, M.C., Roventini, A., Virgillito, M.E. (2018) The effects of labour market reforms upon unemployment and income inequalities: An agent-based model. Socio-Economic Review, 16(4): 687-720
Engelbert, S., Guschanski, A., Köhler, K. (2014) Unemployment, Capital Accumulation and Labour Market Institutions in the Great Recession. European Journal of Economics and Economic Policies: Intervention, 11(2): 182-194
Ennis, S.F., Gonzaga, P., Pike, C. (2019) Inequality: A hidden cost of market power. Oxford Review of Economic Policy, 35(3): 518-549
European Commission-Publications Office of the European Union (2015) Employment and social developments in Europe 2014. Luxembourg, available at:
Ferreiro, J., Gomez, C. (2020) Employment protection and labor market results in Europe. Journal of Evolutionary Economics, 30(2): 401-449
Ferreiro, J., Gómez, C. (2017) The Global Financial Crisis and the Labour Markets in Europe: Do Labour Institutions Matter?. in: Arestis Philip, Sawyer Malcolm [ed.] Economic Policies since the Global Financial Crisis, Basingstoke: Palgrave Macmillan, 265-311
Furceri, D., Ostry, J.D. (2019) Robust Determinants of Income Inequality. Oxford Review of Economic Policy, 35(3): 490-517
Gal, P., Theising, A. (2015) The Macroeconomic Impact of Structural Policies on Labour Market Outcomes in OECD Countries: A Reassessment. OECD Economics Department Working Paper, 1271
Giovanni, D., Pereira, M.C., Roventini, A., Virgillito, M.E. (2017) When more flexibility yields more fragility: The microfoundations of Keynesian aggregate unemployment. Journal of Economic Dynamics and Control, 81: 162-186
Gutierrez-Barbarrusa, T. (2016) The Growth of Precarious Employment in Europe: Concepts, Indicators and the Effects of the Global Economic Crisis. International Labour Review, 155(4): 477-508
Heyes, J., Lewis, P. (2015) Relied upon for the heavy lifting: Can employment protection legislation reforms lead the EU out of the jobs crisis?. Industrial Relations Journal, 46(2): 81-99
Ippolito, M., Cicatiello, L. (2019) Political instability, economic inequality and social conflict: The case in Italy. Panoeconomicus, vol. 66, br. 3, str. 365-383
Josifidis, K., Supić, N., Beker-Pucar, E. (2017) Institutional quality and income inequality in the advanced countries. Panoeconomicus, vol. 64, br. 2, str. 169-188
Josifidis, K., Supić, N. (2018) Institutionalist versus neoclassical view on income distribution and economic progress: The OECD panel evidence. Panoeconomicus, vol. 65, br. 3, str. 319-337
Kleinknecht, A., Naastepad, C.W.M., Storm, S., Vergeer, R. (2013) Labour Market Rigidities Can Be Useful: A Schumpeterian View. in: Fadda Sebastiano, Tridico Pasquale [ed.] Financial Crisis, Labour Markets and Institutions, London: Routledge, 175-191
Kristal, T., Cohen, Y. (2017) The causes of rising wage inequality: The race between institutions and technology. Socio-Economic Review, 15(1): 187-212
Kugler, A.D. (2019) Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America. IMF Working Papers, 19(155)
Kuznets, S. (1955) Economic Growth and Income Inequality. American Economic Review, 45(1): 1-28
Lavoie, M. (2017) The origins and evolution of the debate on wage-led and profit-led regimes. European Journal of Economics and Economic Policies: Intervention, 14(2): 200-221
Mcbride, S., Watson, J. (2019) Reviewing the 2018 OECD Jobs Strategy: Anything new under the sun?. Transfer: European Review of Labour and Research, 25(2): 149-163
Nolan, B., Richiardi, M.G., Valenzuela, L. (2019) The Drivers of Income Inequality in Rich Countries. Journal of Economic Surveys, 33(4): 1-40
Nolan, B., Valenzuela, L. (2019) Inequality and its discontents. Oxford Review of Economic Policy, 35(3): 396-430
Novta, N., Pugacheva, E. (2019) Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?. International Monetary Fund Working Paper, 191
Organisation for Economic Co-operation and Development (2018) Good Jobs for All in a Changing World of Work: The OECD Jobs Strategy. Paris
Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press
Roberts, A., Kwon, R. (2017) Finance, Inequality and the Varieties of Capitalism in Post-Industrial Democracies. Socio-Economic Review, 15(1): 511-538
Stockhammer, E. (2013) Financialization, Income Distribution and the Crisis. in: Fadda Sebastiano, Tridico Pasquale [ed.] Financial Crisis, Labour Markets and Institutions, London: Routledge, 98-119
Tridico, P. (2017) Inequality in Financial Capitalism. London: Routledge
Tridico, P., Pariboni, R. (2017) Inequality, Financialization, and Economic Decline. Journal of Post Keynesian Economics, 41(2): 236-259
Tridico, P. (Forthcoming) Global Inequality and National Inequality: Is there a Trade-Off?. Panoeconomicus


article language: English
document type: Original Scientific Paper
DOI: 10.2298/PAN2003291A
published in SCIndeks: 02/09/2020
Creative Commons License 4.0

Related records