Do Industrial Relations Institutions Impact Economic Outcomes?: International and U.S. State-Level Evidence

The impact of government social and labor market institutions on economic outcomes have generated a great deal of attention by economists and policymakers in the U.S. and in other nations. The theoretical model suggests that there are trade offs of higher levels of economic outcomes with more equity-producing labor market institutions. This study examines the impact of national levels of unionization, strike levels, public policies toward labor, and the structure of collective bargaining within a nation on a country's foreign direct investment (FDI). As an additional test of the relationship of labor market institutions and state labor market policies and economic outcomes, we examine the empirical relationship with the economic growth of U.S. states. Examining 20 OECD nations from 1985 through 1995 and all U.S. states from 1990 to 1999, our statistical analysis shows that higher levels of industrial relations institutions are usually associated with lower levels of FDI and slower economic growth for U.S. states. However, within the context of the model the results do not necessarily suggest that a nation or state would be better off trading social equity through fewer restrictive industrial relations institutions for higher levels of economic growth.

Do Industrial Relations Institutions Impact Economic Outcomes?: International and U.S. State-Level Evidence

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Do industrial relations institutions impact economic outcomes? International and U.S. state-level evidence

'This impact of government social and labor market institutions on economic outcomes have generated a great deal of attention by economists and policymakers in the U.S. and in other nations. The theoretical model suggests that there are trade offs of higher levels of economic outcomes with more equity-producing labor market institutions. This study examines the impact of national levels of unionization, strike levels, public toward labor, and the structure of collective bargaining within a nation on a country's foreign direct investment (FDI). As an additional test of the relationship of labor market institutions and state labor market policies and economic outcomes, we examine the empirical relationship with the economic growth of U.S. states. Examining 20 OECD nations from 1985 through 1995 and all U.S. states from 1990 to 1999, our statistical analysis shows that higher levels of industrial relations institutions are usually associated with lower levels of FDI and slower economic growth for U.S. states. However, within the context of the model the results do not necessarily suggest that a nation or state would be better off trading social equity through fewer restrictive industrial relations institutions for higher levels of economic growth.' (author's abstract)Die von staatlichen Institutionen im Sozialbereich und auf dem Arbeitsmarkt ausgehenden oekonomischen Effekte haben bei Wirtschaftswissenschaftlern und Politikern in den USA wie auch in anderen Laendern erhebliche Aufmerksamkeit ausgeloest. Theoretische Modelle lassen vermuten, dass es trade-offs zwischen besseren oekonomischen Ergebnissen und am Prinzip der Gerechtigkeit orientierten Arbeitsmarktinstitutionen gibt. Vor diesem Hintergrund fragen die Verfasser nach den Auswirkungen, die vom gewerkschaftlichen Organisationsgrad, der Haeufigkeit und Intensitaet von Arbeitskaempfen und dem Tarifvertragswesen in einem Land auf die auslaendischen Direktinvestitionen in diesem Land ausgehen. Die Beziehung zwischen Arbeitsmarktinstitutionen und staatlicher Arbeitsmarktpolitik einerseits und wirtschaftlichem Erfolg andererseits wird zusaetzlich empirisch am Beispiel des Wirtschaftswachstums in den Bundesstaaten der USA untersucht. Auf der Basis von Daten fuer 20 OECD-Staaten (1985-1995) und die Bundesstaaten der USA (1990-1999) wird gezeigt, dass eine hoehere Institutionalisierung der industriellen Beziehungen in den amerikanischen Bundesstaaten fuer gewoehnlich mit niedrigeren auslaendischen Direktinvestitionen und niedrigerem Wirtschaftswachstum einher geht. Dieses Modell laesst sich jedoch nicht dahingehend interpretieren, dass ein Land generell besser beraten waere, soziale Gerechtigkeit durch eine Entscheidung fuer eine weniger restriktive Gestaltung der industriellen Beziehungen fuer ein hoeheres Wirtschaftswachstum zu opfern. (ICCuebers)German title: Wirken sich Institutionen der industriellen Beziehungen auf wirtschaftliche Ergebnisse aus: Befunde aus internationalem VergleichSIGLEAvailable from IAB-6827 BM 295 / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman

Informal Institutions and Foreign Direct Investment

Foreign direct investment (FDI) inflows cannot solely be determined by conventional variables such as availability of natural resources, high skilled manpower or modern infrastructure. Important explanations also include the crucial role of institutions in attracting investment flows. This study explores the role of informal institutions in investment flows as well as the relationship between formal and informal institutions in the context of FDI flows. The term informal institutions has been used to describe a diverse set of practices such as corruption or culture thus leading to a serious conceptual ambiguity. This study attempts to provide a more precise and analytically useful definition. It builds on the Helmke and Levitsky typology of informal institutions