Labor market deregulation and globalization: empirical evidence from OECD countries

Abstract

This paper empirically investigates the influence of globalization on various aspects of labor market deregulation. I employ the data set by Bassanini and Duval (2006) The results suggest that globalization did neither influence the unemployment replacement rate, the unemployment benefit length, public expenditures on ALMP, the tax wedge, union density nor overall employment protection. In contrast, protection of regular employment contracts was diminished when globalization was proceeding rapidly. In fact, domestic aspects, such as unemployment and government ideology are more important determinants of labor market institutions and deregulation processes in OECD countries than globalization. For this reason, working conditions of unskilled workers are not likely to deteriorate and the jobs of unskilled workers are not likely to disappear in the course of globalization. All this is, of course, not to insinuate that globalization has any benign influence on labor market institutions.

Globalization and social justice in OECD countries

“…It is, however, also conceivable that globalization induces a higher demand for labor market regulation because of increased uncertainty in a global market. The results of Potrafke (2010 and do not show that globalization has reduced labor market regulation. The results of Davies and Vadlamannati (2013), however, show that countries compete in labor practices (enforcement), but not in labor laws.…”

Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries

“…5 In OECD countries, market-oriented governments deregulated labor markets to some extent. Potrafke (2009a) analyzes whether globalization has influenced labor market deregulation and also controls for government ideology. He employs the dataset by Bassanini and Duval (2006), which tackles various aspects of labor market deregulation, and finds that only deunionization took place under rightwing governments.…”

The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare?

“…Burgoon [21] found suggestive evidence supporting the compensation thesis in the context of ALMPs indicating, via a pooled Ordinary Least Squares (OLS) analysis of 19 countries covering 1980 to 1994, that training and relocation benefits were increased as the economic globalization intensified. In a pooled panel analysis covering 1982 to 2003, however, Potrafke [25] reports contrary findings. The impact of the domestic political factors was found to be more significant than economic globalization.…”