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References
See Katz and Autor (1999) for a detailed survey of the literature.
A recent study of the rise of the U.K. wage differential is given by Prasad (2002).
Please note that the considered time series differs from the data published by the OECD. However, the slight positive growth rate is in line with findings of Fitzenberger (1999). See also Greiner, Rubart, and Semmler (2004) for an application of this time series.
The theory of dual labor markets was developed in the United States in the 1970s in the context of debates on poverty and discrimination. See Saint-Paul (1996) p. 2.
See Saint-Paul (1996), chapter 9. The importance of firing costs is also analyzed by Bentolila and Bertola (1990), Delacroix (2003).
ICT investments are measured as percentage of non-residential investment of the whole economy (Cf. Colecchia and Schreyer (2001)).
A further explanation is given by Blanchard and Giavazzi (2003) who state that high product market rigidities also account for the low economic performance. However, product and labor market rigidities are so strongly correlated that the impact of each source is very difficult to determine.
See, for instance, Nickell (1997), and Blanchard and Wolfers (2000) for studies concerning the role of labor market institutions in the rise in European unemployment.
See Pissarides (2001) p. 136.
See Dolado et al. (1996), Blau and Kahn (1999), and Lee (1999) or Gosling and Lemieux (2001) for detailed discussions of the impact of minimum wages on explaining the wage distribution.
The data on relative employment are taken from Layard, Jackman, Manacorda, and Petrongolo (1999) for the years 1980 and 1989. The growth rate is calculated as x1989/x1980-1. The employment protection index is taken from the labor market institutions database by Nickell, Nunziata, Ochel, and Quintini (2003), the data applied in the regression are the arithmetic means of the variables in 1980 and 1989. The solid line is calculated by OLS: constant: 0.56(4.54), β: 0.106(1.15), R2= 0.09, t-statistics in parentheses.
The data for minimum wages and unemployment are taken from the OECD (1997) as well as OECD (2000). Furthermore, the data set is enlarged by data taken from EIRO publication “Minimum Wages in Europe”, available at www.eiro.eurofund.eu.int. The data are collected for the year 1997, except for Germany and Ireland where the data represent the years 2003 and 2004, respectively. Furthermore, the unemployment rate of low skilled workers is defined in accordance to the OECD, i.e. it measures unemployed workers who earned less than a secondary educational degree. The solid line of figure 2.7 is calculated by OLS: constant: 2.703(0.72), j3: 0.1207(1.64), R2 = 0.12, t-statistics in parentheses.
[...] it could be fruitful to formulate the model as a dynamic bargaining model [...], cf. Fitzenberger (1999) p. 202.
A detailed description of the VAR methodology can be found in Lütkepohl (1993) or Hamilton (1994), chaps. 10 and 11.
Cf. Hamilton (1994) p. 327.
See, for example Hamilton (1994) p. 259 ff.
Cf. Hamilton (1994) p. 318.
This section mainly refers to Rubart (2006).
The data are based on own calculations (wage spread, relative employment) as well as on data taken from the OECD Statistical Compendium, OECD Economic Outlook, 2005. A detailed description of the data used in this section can be found in appendix B.
A reduced form VAR approach to examine macroeconomic policies under labor market frictions can be found, for example, in Yashiv (2004). In addition, more sophisticated VAR models of labor market flows can be found in Blanchard and Diamond (1989) or Balakrishnan and Michelacci (2001). In particular, the latter study concentrates on job creation and job destruction dynamics in main OECD countries.
See also Enders (1995) p. 301 for a discussion of estimating VAR models in levels.
A detailed description of the specification tests can be found in Lütkepohl (1993) or Lütkepohl (2004) p. 110 f. All estimations as well as the obtained impulse-response functions are computed using JMulTi, available at www.jmulti.de, based on Krätzig (2004).
Cf. Acemoglu (1998) p. 1057.
See, e.g. Blanchard and Wolfers (2000) for a survey of the impact of labor market institutions on continental European unemployment. Furthermore, the recent study by Ljungqvist and Sargent (2005) refers to layoff costs and generous unemployment compensation as the source of high unemployment rates in Europe.
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(2007). The Empirics of Inequality and Institutions. In: The Employment Effects of Technological Change. Lecture Notes in Economics and Mathematical Systems, vol 593. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69956-9_2
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