Inequality and Labor Market Institutions

By Florence Jaumotte, Carolina Osorio Buitron

July 1, 2015

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Florence Jaumotte, and Carolina Osorio Buitron. Inequality and Labor Market Institutions, (USA: International Monetary Fund, 2015) accessed December 22, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

The SDN examines the role of labor market institutions in the rise of income inequality in advanced economies, alongside other determinants. The evidence strongly indicates that de-unionization is associated with rising top earners’ income shares and less redistribution, while eroding minimum wages are related to increases in overall income inequality. The results, however, also suggest that a lack of representativeness of unions may be associated with higher inequality. These findings do not necessarily constitute a blanket recommendation for higher unionization and minimum wages, as country-specific circumstances and potential trade-offs with other policy objectives need to be considered. Addressing inequality also requires a multipronged approach, which should include taxation reform and curbing excesses associated with financial deregulation.

Subject: Income distribution, Income inequality, Labor, Labor market institutions, Minimum wages, National accounts, Personal income

Keywords: Collective bargaining, Density need, Gini of gross income, Income distribution, Income distribution, Income inequality, Income share, Inequality, Labor market institutions, Least squares, Minimum wage, Minimum wages, Personal income, Political system, SDN, Share statistics, Southern Europe, Top income shares, Union, Union density, Unions

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2015/014
Stock No:

SDNEA201514
ISBN:

9781513577258
ISSN:

2617-6750

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