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Inequality
Growth
and Poverty in an Era of Liberalization and Globalization$
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Giovanni Andrea Cornia

Print publication date: 2004

Print ISBN-13: 9780199271412

Published to Oxford Scholarship Online: August 2004

DOI: 10.1093/0199271410.001.0001

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Labour Market Institutions and Income Inequality: What are the New Insights after the Washington Consensus?

Labour Market Institutions and Income Inequality: What are the New Insights after the Washington Consensus?

Chapter:
(p.197) 8 Labour Market Institutions and Income Inequality: What are the New Insights after the Washington Consensus?
Source:
Inequality Growth and Poverty in an Era of Liberalization and Globalization
Author(s):

Rolph van der Hoeven

Catherine Saget

Publisher:
Oxford University Press
DOI:10.1093/0199271410.003.0008

Looks at some of the labour market outcomes of recent economic reforms. The extent to which labour market institutions affect the relationship between reform policies and income inequality remains controversial. Some see labour market institutions as a hindrance to more efficient development and growth, while others argue that without proper labour market institutions an economy cannot progress. Labour market policies, regulations, and institutions have at least three goals: improving allocative efficiency (matching supply and demand); improving dynamic efficiency (increasing the quality of the labour force); and improving or maintaining a sense of equity and social justice among labour force participants. These different goals inform the discussion throughout the chapter, which is organized as follows: after an introduction, the second section touches briefly on some theoretical aspects of labour markets and reform policies; the third reviews trends in labour market changes in terms of informalization of employment, wage shares in national income, and wage inequality; the fourth reviews some general trends in labour market policies that have typically been implemented under the Washington Consensus, namely, a decline in minimum wages, shifts in the bargaining power of unions, and a reduction in employment protection; the final section offers conclusions on whether or not labour market policies reduce income inequality.

Keywords:   allocative efficiency, dynamic efficiency, economic policy, economic reform, employment, employment protection, equity, income inequality, inequality, informalization of employment, labour force, labour force quality, labour market, labour market institutions, labour market policy, labour market regulation, minimum wage, national income, reform policies, social justice, supply and demand, union bargaining power, wage shares, Washington Consensus

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