Labor market institutions and productivity growth: A six-country comparison

This study investigates problems of productivity growth with special emphasis on institutions in the labor market. Two major classes of labor market institutions are analyzed: corporatism and liberal-pluralism. To examine why productivity growth rates differ among national economies, this thesis undertakes an international comparison of diverse growth experiences in three Western and three Asian countries over a relatively long period, 1960-1990. These countries are: the former West Germany, Sweden, the United States, Japan, South Korea and Taiwan.The results indicate that the cross-national variations in productivity performance among the Western countries are due largely to economic factors, rather than to labor market institutions. In the long run, productivity performance, adjusted for economic and institutional factors, is about the same in Germany, Sweden and the United States, and is also about the same in Japan, Korea and Taiwan. Nonetheless, there is a difference in productivity performance between Western and Asian countries, holding other variables constant. This implies that there still remain some other economic and institutional factors that make Asian countries' growth different from Western countries'.The favorable effects on labor productivity growth of Western corporatist industrial relations systems have declined significantly since the 1973 oil shock. The ability of European countries to improve labor-management relations, to increase employment and to control inflation is called into question. The liberal-pluralist systems of the United States is found to be just as efficient as the European corporatist systems in productivity performance after 1973. Japan's micro-corporatist system, with its decentralized wage setting coupled with a high degree of coordination, is found to be the best performer bringing down industrial conflict, unemployment and inflation together with, at the same time, relatively high and stable productivity growth. Between South Korea and Taiwan, Taiwan's industrial relations systems and labor markets are found to be associated with high productivity growth after adjustment for economic factors.U of I OnlyETDs are only available to UIUC Users without author permissio